U.S. SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-KSB

Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934For the Fiscal Year Ended December 31, 2002

Commission File Number 33-31013

COMMUNITY NATIONAL BANCORPORATION

a Georgia corporation

(IRS Employer Identification No. 58-1856963)
561 East Washington Avenue-Box 2619
Ashburn, Georgia 31714-2619(229) 567-9686

Securities Registered Pursuant to Section 12(b)
of the Securities Exchange Act of 1934:None

Securities Registered Pursuant to Section 12(g)
of the Securities Exchange Act of 1934:Common Stock, No Par Value

Check whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

_________________________

Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-KSB or any amendment to this Form 10-KSB. [X]

The Registrant's revenues for the fiscal year ended December 31, 2002 were $20,668,331.

The aggregate market value of the Common Stock of the Registrant held by non-affiliates of the Registrant on March 28, 2003, was $13,798,943 representing 1,271,792 shares of the Common Stock. The aggregate market value of the Common Stock of the Registrant held by non-affiliates was computed by reference to the average ask and bid price of the Common Stock on the OTC Bulletin Board as of such date (i.e., $10.85 per share). For the purposes of this response, directors, executive officers and holders of 5% or more of the Registrant's Common Stock are considered the affiliates of the Registrant at that date.

The number of shares outstanding of the Registrant's Common Stock as of March 28, 2003: 2,011,495 shares of no par value common stock (the "Common Stock").

Transitional Small Business Disclosure Format:

Yes No X

DOCUMENTS INCORPORATED BY REFERENCE

None.

FORWARD LOOKING STATEMENTS

This Report may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These statements use the words "estimate," "plan," "intend," "expect," "anticipate," "believe" and similar expressions, about plans, objectives, future events or performance and assumptions and other statements that are not statements of historical fact. The Company and the Banks (each as later defined in this Report) caution readers that the following important factors, among others, could cause the Company's actual results to differ materially from the forward-looking statements contained in this Report: (i) the effect of changes in laws and regulations, including federal and state banking laws and regulations, with which the Company or the Bank must comply, and the associated costs of compliance with such laws and regulations either currently or in the future as applicable; (ii) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies as well as by the Financial Accounting Standards Board, or of changes in the Company's organization, compensation and benefit plans; (iii) the effect on the Company's competitive position within its market area of the increasing consolidation within the banking and financial services industries, including the increased competition from larger regional and out-of-state banking organizations as well as non-bank providers of various financial services; (iv) the effect of changes in interest rates; and (v) the effect of changes in the business cycle and downturns in the local, regional or national economies.

The Company cautions that the foregoing list of important factors is not exclusive. The Company does not undertake to update any forward-looking statement, whether written or oral, that the Company or its agents may make from time to time.

PART I

|Item 1. | Description of Business.
|------- | ------------------------
|A.      | Business Development.   

Community National Bancorporation (hereinafter the "Company" or the "Registrant") was incorporated as a Georgia corporation on August 18, 1989, for the purpose of becoming a bank holding company owning 100% of the outstanding capital stock of Community National Bank ("CNB"), a national banking association chartered under the laws of the United States. The Company received approval to become a bank holding company from the Board of Governors of the Federal Reserve System (the "Fed") on February 16, 1990, and from the Georgia Department of Banking and Finance (the "Georgia Department") on February 19, 1990. On December 14, 1990, the Company completed a public offering of its common stock pursuant to which it raised $3,520,010 from the sale of 352,001 shares at $10.00 per share. The Company used substantially all of the proceeds of its public offering to purchase shares of capital stock of CNB. CNB received its permit to begin business from the Office of the Comptroller of the Currency (the "OCC") on August 6, 1990, and commenced business as a commercial bank on August 6, 1990. Since that date, CNB has engaged in a general commercial banking business, emphasizing the banking needs of individuals, and small to medium-sized business and agricultural enterprises in its primary service area. On April 3, 1992, CNB acquired $11.3 million of deposits from the Resolution Trust Corporation as receiver for First Federal Savings Bank, Ashburn, Georgia. On October 9, 1997, the board of directors of the Company authorized a three-for-one stock split for all shares outstanding as of October 6, 1997. In connection with the stock split, the Company amended its Articles of Incorporation, changing the par value of its common stock from $5.00 to no par.

On September 4, 1997, CNB received approval to open a branch in Cordele, Crisp County, Georgia, which branch commenced business on October 27, 1997. On November 20, 1997, CNB received approval to open a second branch in Ashburn, Turner County, which branch commenced business on September 28, 1998. On December 22, 1998, CNB received approval to open a second branch in Crisp County at 702 South Pecan Street in Cordele, which branch commenced business on February 10, 2000.

Effective March 10, 1998, the Company received regulatory approval to open a branch in St. Marys, Camden County, Georgia, and CNB purchased, on March 26, 1998, for $241,074, two parcels of land, 11 acres in the aggregate, in St. Marys. The Company and CNB determined to capitalize the St. Marys branch by means of the proceeds of a public offering. To effect the public offering, the Company filed a Registration Statement on SEC Form SB-2 on May 11, 1998 (the "1998 Offering"). The Company completed the 1998 Offering on December 31, 1998, raising $4,000,000 from the sale of 400,000 shares of its Common Stock at $10 per share.

Effective July 1, 1999, Georgia law was amended to allow a bank holding company owning a bank that does a lawful business in Georgia to acquire control of another bank in Georgia through the formation of a de novo bank, provided that it obtains required departmental approval and any required federal approval. Pursuant to the new law and using the proceeds of the 1998 Offering, effective October 1, 1999, the Company capitalized and opened for business Cumberland National Bank, a de novonational bank ("Cumberland"), which assumed the operations of CNB's Camden County branch on that date.

The Company registered its Common Stock pursuant to Section 12(g) of the Securities and Exchange Act of 1934 by filing a Form 8-A with the Securities and Exchange Commission on February 24, 1999. The Common Stock has since been trading on the OTC Bulletin Board under the symbol "CBAC."

Pursuant to shareholder approval at the annual meeting on May 12, 1999, the Company amended its Articles of Incorporation to provide for three classes of directors with staggered terms, so that in any given year no more than one-third of the total Board membership stands for election; to require two-thirds vote of the outstanding shares to approve certain transactions, amend the Articles of Incorporation or remove a director; and to fix its authorized capital stock at 50,000,000 shares of no par value common stock and 10,000,000 shares of no par value preferred stock, with the Board empowered to authorize the issuance and fix the terms of any preferred stock in its sole discretion.

On February 24, 2000, the Company acquired all of the outstanding capital stock of Tarpon Financial Corporation, a Florida corporation ("Tarpon Financial"), by way of a merger of Tarpon Financial into the Company. The Company paid $3.72 million in a combination of Common Stock and cash in such merger, which was effected pursuant to a Proxy Statement/Prospectus on SEC Form S-4, which became effective on January 27, 2000. Pursuant to such merger, Tarpon Financial's wholly-owned subsidiary, First National Bank, Tarpon Springs ("Tarpon"), in Pinellas County, Florida, a national bank with $1.8 million in capital and $20.7 million in assets, became the third wholly-owned banking subsidiary of the Company.

On September 18, 2002, the Company retained Trident Securities, a division of McDonald Investments ("Trident") to provide financial advisory services consisting of evaluating the strategic alternatives available to the Company, including a sale of one or more of the Banks or of the entire Company. Since the fourth quarter of 2002, Trident has engaged in an effort to identify potential purchasers for the Company or one or more of the Banks and the Company has held discussions with some of these potential purchasers. As of the date of this report, these discussions are ongoing, with no definitive agreement having been reached.

|B. | Regulatory Matters.
|-- | -------------------

Formal Agreements with the OCC. On April 11, 2002, Cumberland entered into a formal agreement with the OCC, pursuant to which Cumberland agreed to take certain actions to ensure its safe and sound operation. The required actions include:

- appointing a compliance committee responsible for monitoring and coordinating the agreement;
- review by the Board of Directors of Cumberland of the Board's committee structure;
- achieving certain capital levels above regulatory minimums, including a Tier I risk weighted capital ratio of 10%;
- implementing a written risk management program;
- implementing a written program to improve Cumberland's loan portfolio management;
- adopting and implementing a written program to eliminate the basis for criticism of assets;
- restrictions on purchases of loans and loan participations;
- engaging a qualified consultant to perform an ongoing asset quality review of Cumberland;
- obtaining current and satisfactory credit information on all loans lacking such information;
- establishing a program for the maintenance of an adequate Allowance for Loan and Lease Losses;
- improving Cumberland's liquidity position;
- increasing the liquidity of Cumberland to a level that is sufficient to sustain current operations and to withstand any extraordinary demand against its funding base;
- adhering to legal lending limits;
- adopting a program to correct existing violations of law or regulations and preventing future violations;
- adopting a written three-year strategic plan;
- ensuring that Cumberland's books and records are restored to a complete and accurate condition;
- adhering to an independent audit program; and
- improving the management of Cumberland's bank information systems activities.

As of the date of this report, the Company believes that most of these requirements have been substantially satisfied. However, the deadline imposed by the OCC for Cumberland's full compliance with these conditions has expired. The Company and Cumberland are continuing in their efforts to satisfy all such conditions as soon as pracitcable.

On August 28, 2002, Tarpon entered into a formal agreement with the OCC, pursuant to which Tarpon agreed to take certain actions to ensure its safe and sound operation, including:

- appointing a new President, subject to prior review of the candidate by the OCC;
- engaging and obtaining a report from an independent outside management consultant to review management staffing, structure and needs;
- achieving certain capital levels above regulatory minimums, including a Tier I risk weighted capital ratio of 10%;
- implementing a written program to improve Tarpon's loan portfolio management;
- taking action to protect its criticized assets;
- establishing a program for the maintenance of an adequate Allowance for Loan and Lease Losses;
- restrictions on purchases of loans and loan participations;
- adopting a written three-year strategic plan;
- adhering to an independent internal audit program; and
- improving the management of Tarpon's bank information systems activities.

As of the date of this report, the Company believes that most of these requirements have been substantially satisfied. In the case of two of the unsatisfied requirements, the engagement of a management consultant and the appointment of a new President, the Company and Tarpon have filed for approval of appropriate candidates with and are awaiting action from the OCC. These two conditions must be satisfied by April 30, 2003. The deadline imposed by the OCC for Tarpon's full compliance with the other conditions has expired. The Company and Tarpon are continuing in their efforts to satisfy all such conditions as soon as practicable.

These agreements will remain in place until the OCC is satisfied that all of these requirements have been met. The Company cannot give assurance that all of these requirements will be met within the relevant time limits. Failure to comply with the terms of either agreement could result in additional regulatory enforcement action, including assessment of civil money penalties or issuance of a Cease and Desist Order, which could impose additional obligations on the banks.

Board Resolution. Following the Fed's on-site inspection of December 9, 2002, at the request of the Fed, the Company's Board of Directors adopted resolutions that, among other things, prohibits the Company from incurring additional debt, declaring or paying dividends or redeeming its treasury stock without approval of the Fed. This resolution will remain in effect until the Fed cancels it. In connection with its inspection, the Fed also required the Company to submit a consolidated budget, Company cash flow projections for the next two years, 12-month and 3-5 year strategic plans for the Company and documentation of Board approval and implementation of a capital plan. The Company failed to meet the deadline imposed by the Fed for submitting these documents. The Company is working to comply with these requirements.

|C. | Business.
|-- | ---------
|   | 1.       

CNB, Cumberland and Tarpon (collectively the "Banks"), conduct a commercial banking business serving Turner, Crisp and Camden Counties, Georgia and Pinellas County, Florida. The Banks offer a full range of deposit services, including checking accounts, NOW accounts, savings accounts and other deposits of various types, ranging from daily money market accounts to longer-term certificates of deposit and retirement accounts such as IRA's (Individual Retirement Accounts).

Other services of the Banks include safe deposit boxes, travelers' checks, direct deposit of payroll and social security checks, and automatic drafts for various accounts, second mortgage loans and installment loans for personal use such as education and personal investment, or for the purchase of automobiles or other consumer items. The Banks are members of the Star network of automated teller machines and each of the Banks offers its own credit cards.

The Banks also offer short to medium-term commercial, agricultural and personal loans. Commercial loans include both secured and unsecured loans for working capital (including inventory and receivables), business expansion (including acquisition of real estate and improvements), and purchase of equipment and machinery. CNB is qualified to participate in Small Business Administration lending. Agricultural loans include secured and unsecured loans for row crop production including corn, soybeans, peanuts, cotton and other produce. Consumer loans include secured and unsecured loans for financing automobiles, home improvements, education and personal investments. CNB, Cumberland and Tarpon offer real estate construction and acquisition loans.

| | 2. | Market Area and Competition.
| | -- | ----------------------------

The Banks' primary service area includes all of the Georgia counties of Turner, Crisp and Camden and the Florida county of Pinellas. CNB also extends credit to qualified borrowers in the contiguous counties of Tift and Worth, Georgia. Turner County is located approximately 80 miles north of the Georgia-Florida state line, 165 miles south of Atlanta, 38 miles east of Albany, and 180 miles west of Savannah. The county is comprised of the cities of Ashburn, which is the county seat, Sycamore and Rebecca and covers an area of 293 square miles. As of 2000, the population of Turner County was 9,504.

Turner County's economy is dependent on agriculture. Management of CNB intends to continue to place a substantial portion of CNB's assets in agricultural loans. This sector of the economy is healthy and remains the largest single force in CNB's market. A significant portion of the agricultural output produced in the county is peanuts. Golden Peanut Company, the largest employer in Turner County, is located in Ashburn, where it operates the largest peanut shelling plant in the Southeast. Coley Farm Services, also headquartered in Ashburn, serves primarily as a peanut buying point for area farmers from three separate locations. Livestock is another important segment of the economy, with the county containing the largest stock yard in Georgia, Turner County Stock Yards. The poultry industry is a growing component of the Turner County economy. A significant number of farmers who built poultry houses have entered into contracts with Tyson Poultry to raise chickens for Tyson Poultry. These contracts have been contributing approximately $1.0 million per year to the local economy. Turner County also contains light manufacturing, primarily in the apparel and textile sector. Other local manufacturing concerns include Tifton Textile, Sunbelt Wood Components, DCR Industries and CentraPack.

As of June 30, 2002, there was one other financial institution in Turner County. FDIC reports show that as of June 30, 2002, deposits in the county totaled $239.9 million, with CNB having approximately 53.8% of such deposits.

Crisp County is located contiguous to Turner County on its northwest border. Although Crisp County is slightly smaller than Turner County in total area, its population, currently estimated at 21,996, is about twice that of Turner County. Retail trade and service industries are the largest employment sectors in the county. The county's per capita income for 1999 was $27,324. According to its Chamber of Commerce, Crisp County currently has approximately 800 reported business establishments. Wal-Mart, Crisp Regional Hospital, Masonite Corporation and Serco Company are among the largest non-governmental employers in the county.

Arabi and Cordele are the only two incorporated municipalities in Crisp County. The county is the gateway to the Presidential Pathways Travel Region, with many attractions within easy driving distance of Cordele, including the home of former President Jimmy Carter, the Little Grand Canyon and the Andersonville Confederate Prison site. Crisp County is one of the few areas in the nation designated as an Enterprise Community/Enterprise Zone.

As of June 30, 2002, there were six financial institutions and eight branches represented in Crisp County. FDIC reports show that as of June 30, 2002, deposits in the county totaled $268.3 million, with CNB's branch having approximately 9.6% of such deposits.

Camden County is bordered on the south by the Florida state line and on the east by the Atlantic Ocean and Barrier Islands. In total, Camden County encompasses 630 square miles. The city of St. Marys is located seven miles east of Interstate 95 on Highway 40 extending east to the Atlantic Coast. The economy of this picturesque southern stretch of Camden County relies heavily on its ocean access, ports and natural resources. In 1979, Kings Bay, at St. Marys, was selected as the location of the United States Navy's East Coast Trident submarine base. The base at Kings Bay supports the Submarine Launched Ballistic Missile System, Trident and Ohio Class submarines. The base began operations in 1989 and currently includes ten submarines. In addition to the naval facility, paper, seafood, manufacturing and retail activities contribute to the local economy. Tourism is also a significant factor, due largely to the historic and natural appeal of St. Marys and Cumberland Island. As of 2000, the population estimate for Camden County was 43,000.

The Camden County's population grew at a steady rate during the 1990's and the Company's management believes that Camden County represents a significant growth opportunity for the Company. As of June 30, 2002, there were seven banks and twelve financial institution branches in Camden County. FDIC reports show that, as of June 30, 2002, deposits in the county totaled $290.4 million, with Cumberland having approximately 15.7% of such deposits.

Historically, CNB's loan mix weighed heavily toward agriculture related loans. By expanding into the Camden County banking market, the Company put itself into a position of making loans to small commercial and light industrial customers and the many retirees purchasing homes in Camden County. The Company's expansion into the Pinellas County banking market on the West Coast of Florida was also motivated by the desire to diversify the loan portfolio of the Company.

Tarpon's primary service area is northern Pinellas County, Florida, including the city of Tarpon Springs and the contiguous towns of Holiday and Palm Harbor. Pinellas County occupies a peninsula bordered by the Gulf of Mexico on the west and by Tampa Bay on the east, covering approximately 264 square miles. The county had a permanent population of 893,468 in 2000, some 40,921 additional seasonal residents, and an estimated 4,251,045 visitors. Tarpon Springs is the county's oldest city. It was incorporated in 1887 and quickly developed as a winter resort and vacation destination. In 1905, Greek immigrants began harvesting natural sponges from the adjacent Spring Bayou, and today Tarpon Springs ranks among the world's leading producer of natural sponges. Tourism and service industries are the area's other principal industries. There are currently 33 financial institutions serving Pinellas County. FDIC reports show that as of June 30, 2002, deposits at these financial institutions totaled $15.2 billion with Tarpon having 0.2% of such deposits.

Each of the Banks competes and will compete as a financial intermediary with other commercial banks, savings and loan associations, credit unions, mortgage banking companies, consumer finance companies, securities brokerage firms, insurance companies, money market mutual funds and other financial institutions. Competition is likely to increase due to trends in federal interstate banking laws and state laws. Many of the financial institutions operating in Georgia have substantially greater financial resources and offer certain services, such as trust services, that the Banks do not expect to provide in the near future. By virtue of their greater total capitalization, such institutions have substantially higher lending limits than the Banks and substantial advertising and promotional budgets. To compete, each of the Banks relies on specialized services, responsive handling of customer needs and personal contacts by officers, directors and staff.

| | 3. | Distribution of Assets, Liabilities and Shareholders' Equity; Interest Rates and Interest Differential.
| | -- | -------------------------------------------------------------------------------------------------------

The following is a presentation of the average consolidated balance sheet of the Company for the years ended December 31, 2002 and December 31, 2001. This presentation includes all major categories of interest-earning assets and interest-bearing liabilities: ($ in 000's)



|AVERAGE CONSOLIDATED ASSETS                              
|---------------------------------------------------------
|                                                         
|                                                         
|Cash and due from Banks                                  
|Interest bearing bank balances                           
|Taxable securities                                       
|Non-taxable securities                                   
|Federal Funds sold                                       
|Net Loans                                                
|Total earning assets                                     
|Other assets                                             
|Total assets                                             
|AVERAGE CONSOLIDATED
LIABILITIES AND STOCKHOLDERS' EQUITY
|                                                         
|                                                         
|Non interest-bearing deposits                            
|NOW and money market deposits                            
|Savings Deposits                                         
|Time Deposits                                            
|Borrowings                                               
|Other Liabilities                                        
|Total liabilities                                        
|Common Stock                                             
|Treasury Stock                                           
|Retained earnings                                        
|Unrealized gain/loss securities                          
|Total stockholders' equity                               
|Total liabilities and stockholders' equity               

The following is a presentation of an analysis of the net interest earnings of the Company for the periods indicated with respect to each major category of interest-earning asset and each major category of interest-bearing liability. The Yield/Rate was computed on a tax equivalent basis. ($ in 000's)

|                                                                                                                                                                                                                                                                                                          | Year Ended December 31, 2002
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------
|                                                                                                                                                                                                                                                                                                          | AverageAmount               
|Assets                                                                                                                                                                                                                                                                                                    |                             
|Interest-bearing bank balances                                                                                                                                                                                                                                                                            | $                           
|Taxable securities                                                                                                                                                                                                                                                                                        |                             
|Non-taxable securities                                                                                                                                                                                                                                                                                    |                             
|Federal funds sold                                                                                                                                                                                                                                                                                        |                             
|Net loans                                                                                                                                                                                                                                                                                                 |                             
|Total earnings assets                                                                                                                                                                                                                                                                                     | $                           
|Liabilities                                                                                                                                                                                                                                                                                               |                             
|NOW and money market deposits                                                                                                                                                                                                                                                                             | $                           
|Savings deposits                                                                                                                                                                                                                                                                                          |                             
|Time deposits                                                                                                                                                                                                                                                                                             |                             
|Borrowings                                                                                                                                                                                                                                                                                                |                             
|Total interest-bearing liabilities                                                                                                                                                                                                                                                                        | $                           
|Interest spread                                                                                                                                                                                                                                                                                           |                             
|Net interest income                                                                                                                                                                                                                                                                                       |                             
|Net yield on interest earning assets                                                                                                                                                                                                                                                                      |                             
|Net loans include $5,429 in loans that were placed on non-accrual status. The Company would have earned an additional $179 (after tax) had these loans accrued interest throughout 2002.
Interest earned on net loans include $1,527 in loan fees.
The yield on non-taxable securities is tax-equivalent.
|                                                                                                                                                                                                                                                                                                          | Year Ended December 31, 2001
|                                                                                                                                                                                                                                                                                                          | AverageAmount               
|Assets                                                                                                                                                                                                                                                                                                    |                             
|Interest-bearing bank balances                                                                                                                                                                                                                                                                            | $                           
|Taxable securities                                                                                                                                                                                                                                                                                        |                             
|Non-taxable securities                                                                                                                                                                                                                                                                                    |                             
|Federal funds sold                                                                                                                                                                                                                                                                                        |                             
|Net loans                                                                                                                                                                                                                                                                                                 |                             
|Total earnings assets                                                                                                                                                                                                                                                                                     | $                           
|Liabilities                                                                                                                                                                                                                                                                                               |                             
|NOW and money market deposits                                                                                                                                                                                                                                                                             | $                           
|Savings deposits                                                                                                                                                                                                                                                                                          |                             
|Time deposits                                                                                                                                                                                                                                                                                             |                             
|Borrowings                                                                                                                                                                                                                                                                                                |                             
|Total interest-bearing liabilities                                                                                                                                                                                                                                                                        | $                           
|Interest spread                                                                                                                                                                                                                                                                                           |                             
|Net interest income                                                                                                                                                                                                                                                                                       |                             
|Net yield on interest earning assets                                                                                                                                                                                                                                                                      |                             

1. Net loans include $1,912 in loans that were placed on non-accrual status. The Company would have earned an additional $56 (after tax) had these loans accrued interest throughout 2001.
2. Interest earned on net loans include $1,583 in loan fees.

(3)	The yield on non-taxable securities is tax equivalent.

| | 4. | Rate/Volume Analysis of Net Interest Income.
| | -- | --------------------------------------------

The effect on interest income, interest expense and net income in the periods indicated of changes in average balance and rate from the corresponding prior period is shown below. The effect of a change in average balance has been determined by applying the average rate in the earlier period to the change in average balance in the later period, as compared with the earlier period. The change in interest due to both volume and rate has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each. ($ in 000's)



|                               | Year Ended December 31, 2002Compared with Year Ended December 31, 2001
|------------------------------ | ----------------------------------------------------------------------
|                               | Increase (decrease) due to:                                           
|Interest earned on:            | Volume                                                                
|Interest-bearing bank balances | $                                                                     
|Taxable securities             |                                                                       
|Non-taxable securities         |                                                                       
|Federal funds sold             |                                                                       
|Net loans                      |                                                                       
|Total Interest Income          | $                                                                     
|Interest paid on:              |                                                                       
|NOW and money market deposits  | $                                                                     
|Savings deposits               |                                                                       
|Time deposits                  |                                                                       
|Borrowings                     |                                                                       
|Total Interest Expense         | $                                                                     
|Change in net interest income  | $                                                                     
|                               | Year Ended December 31, 2001Compared with Year Ended December 31, 2000
|                               | Increase (decrease) due to:                                           
|Interest earned on:            | Volume                                                                
|Interest-bearing bank balances | $                                                                     
|Taxable securities             |                                                                       
|Non-taxable securities         |                                                                       
|Federal funds sold             |                                                                       
|Net loans                      |                                                                       
|Total Interest Income          | $                                                                     
|Interest paid on:              |                                                                       
|NOW and money market deposits  | $                                                                     
|Savings deposits               |                                                                       
|Time deposits                  |                                                                       
|Borrowings                     |                                                                       
|Federal funds purchased        |                                                                       
|Total Interest Expense         |                                                                       
|Change in net interest income  | $                                                                     
|                               | 5.                                                                    

The Banks offer a full range of interest-bearing and non-interest bearing accounts, including commercial and retail checking accounts, negotiable order of withdrawal ("NOW") accounts, individual retirement accounts, regular interest-bearing savings accounts and certificates of deposit with a range of maturity date options. The sources of deposits are residents, businesses and employees of businesses within the Banks' market areas. Customers are obtained through personal solicitation, direct mail solicitation and advertisements published in the local media.

The Banks pay competitive interest rates on time and savings deposits up to the maximum permitted by law or regulation. In addition, they have implemented a service charge fee schedule competitive with other financial institutions, covering such matters as maintenance fees on checking accounts, per item processing fees on checking accounts, returned check charges and the like.

The following table presents, for the periods indicated, the average amount of and average rate paid on each of the indicated deposit categories. ($ in 000's)

|                                     | Year Ended December 31, 2002
|------------------------------------ | ----------------------------
|Deposit Category                     | Average Amount              
|Non interest bearing demand deposits | $                           
|NOW and money market deposits        |                             
|Savings deposits                     |                             
|Time deposits                        |                             
|                                     | Year Ended December 31, 2001
|Deposit Category                     | Average Amount              
|Non interest bearing demand deposits | $                           
|NOW and money market deposits        |                             
|Savings deposits                     |                             
|Time deposits                        |                             

The following table indicates amounts outstanding of time certificates of deposit of $100,000 or more and respective maturities at December 31, 2002:

|Time Certificates of Deposit
|----------------------------
|3 months or less            
|3-6 months                  
|6-12 months                 
|over 12 months              
|Total                       
|                            

The Banks engage in a full complement of lending activities, including commercial, consumer installment and real estate loans. A significant number of loans are made to farmers or farming concerns.

Commercial lending is directed principally towards businesses whose demands for funds fall within the Company's legal lending limits and which are potential deposit customers of the Banks. These loans include loans obtained for a variety of business purposes, and are made to individual, partnership or corporate borrowers. The Banks place particular emphasis on loans to small and medium-sized businesses.

The Company's consumer loans consist primarily of installment loans to individuals for personal, family and household purposes, including automobile loans and pre-approved lines of credit to individuals. This category of loans includes lines of credit and term loans secured by second mortgages on residences for a variety of purposes, including home improvements, education and other personal expenditures.

The Company's real estate loans consist of residential and commercial first and second mortgages.

The following table presents various categories of loans contained in the Company's loan portfolio as of December 31, 2002 and 2001 and the total amount of all loans for such periods: ($ in 000's)

|                                           | As of December 31,
|------------------------------------------ | ------------------
|Type of Loan                               | 2002              
|Domestic                                   |                   
|Commercial, financial and agricultural     | $                 
|Real estate-construction                   |                   
|Real estate mortgage                       |                   
|Installment and other loans to individuals |                   
|Subtotal                                   | $                 
|Allowance for loan losses                  | $                 
|Total (net of allowance)                   | $                 

The following is a presentation of an analysis of maturities of loans as of December 31, 2002 ($ in 000's):

|Type of Loan                           | Due in 1Year or Less | Due in 1to 5 Years | Due After5 Years | Total 
|-------------------------------------- | -------------------- | ------------------ | ---------------- | ------
|Commercial, financial and agricultural | $                    | 77,663             | $                | 50,411
|Real estate-construction               |                      | 4,203              |                  | - -   
|Total                                  | $                    | 81,866             | $                | 50,411

Experience of the Company has shown that some receivables will be paid prior to contractual maturity and others will be converted, extended or renewed. Therefore, the tabulation of contractual payments should not be regarded as a forecast of future cash collections.

The following is a presentation of an analysis of sensitivity of loans, excluding installment and other loans to individuals, to changes in interest rates as of December 31, 2002 ($ in 000's):

|Type of Loan        | Due in 1Year or Less | Due in 1to 5 Years | Due After5 Years | Total 
|------------------- | -------------------- | ------------------ | ---------------- | ------
|Fixed rate loans    | $                    | 62,281             | $                | 39,336
|Variable rate loans |                      | 19,585             |                  | 11,075
|Total               | $                    | 81,866             | $                | 50,411

The following table presents information regarding non-accrual, past due and restructured loans as of December 31, 2002 and 2001 (dollars in thousands):

|                                                                                                                                                              | As of December 31
|------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------
|                                                                                                                                                              | 2002             
|Loans accounted for on a non-accrual basis:                                                                                                                   |                  
|Number:
Amount:                                                                                                                                               | 70
$5,329        
|Accruing loans which are contractually past due 90 days or more as to principal and interest payments:                                                        |                  
|Number:
Amount:                                                                                                                                               | 18
$157          
|Loans which were renegotiated to provide a reduction or deferral of interest or principal because of deterioration in the financial position of the borrower: |                  
|Number:
Amount:                                                                                                                                               | 9
$1,114         
|Loans now current but for which there are serious doubts as to the borrower's ability to comply with existing terms:                                          |                  
|Number:
Amount:                                                                                                                                               | 109
$25,364      

As of December 31, 2002, there are no loans classified for regulatory purposes as doubtful, substandard or special mention that have not been disclosed in the above table, which (i) represent or result from trends or uncertainties which management reasonably expects will materially impact future operating results, liquidity, or capital resources, or (ii) represent material credits about which management is aware of any information which causes management to have serious doubts as to the ability of such borrowers to comply with the loan repayment terms.

Loans are classified as non-accruing when the probability of collection of either principal or interest becomes doubtful. The balance classified as non-accruing represents the net realizable value of the account, which is the most realistic estimate of the amount the Company expects to collect in final settlement. If the account balance exceeds the estimated net realizable value, the excess is written off at the time this determination is made.

At December 31, 2002, with the exception of the seventy non-accruing loans reported above, all loans were accruing interest. There are no other loans which are not disclosed above where known information about possible credit problems of borrowers causes management to have serious doubts as to the ability of such borrowers to comply with the loan repayment terms.

| | 7. | Summary of Loan Loss Experience.
| | -- | --------------------------------

An analysis of the Company's loss experience is furnished in the following table for the years ended December 31, 2002 and 2001, as well as a breakdown of the allowance for possible loan losses ($ in 000's):

|                                                                                | Year Ended December 31,
|------------------------------------------------------------------------------- | -----------------------
|                                                                                | 2002                   
|Balance at beginning of period                                                  | $                      
|Charge-offs                                                                     |                        
|Recoveries                                                                      |                        
|Provision charged to operations                                                 |                        
|Balance at end of period                                                        | $                      
|Ratio of allowance for loan losses to total loans outstanding during the period |                        
|Net charge-offs to average loans                                                |                        

As of December 31, 2002, the allowance for possible losses was allocated as follows: ($ in 000's)

|Loans                                      | Amount | Percent of Loan
in EachCategory to Total
|------------------------------------------ | ------ | ----------------------------------------
|Commercial, financial and agricultural     | $      | 2,965                                   
|Real estate-Construction                   |        | 132                                     
|Real estate-Mortgage                       |        | 680                                     
|Installment and other loans to individuals |        | 472                                     
|Unallocated                                |        | 75                                      
|Total                                      | $      | 4,324                                   
|                                           | 8.     | Loan Loss Reserve.                      

In considering the adequacy of the Company's allowance for possible loan losses, management has focused on the fact that as of December 31, 2002, 65.6% of outstanding loans were in the category of commercial, financial and agricultural, loans. Management generally regards these loans as riskier than other categories of loans in the Company's loan portfolio. However, 90.5% of the outstanding loans in this category at December 31, 2002, were made on a secured basis, such collateral consisting primarily of improved farmland real estate and equipment. Management believes that the secured condition of the preponderant portion of its commercial, financial and agricultural loan portfolio greatly reduces any risk of loss inherently present in these loans. All three Banks have experienced significant losses in this loan category primarily due to insufficiently rigorous underwriting criteria. The primary focus for calendar year 2003 is to improve the quality of the loan portfolio and, in turn, reduce the provision for loan losses, an expense item.

The Company's consumer loan portfolio is also secured. At December 31, 2002, the majority of the Company's consumer loans were secured by collateral primarily consisting of automobiles, boats and second mortgages on real estate. The Company incurred significant losses during calendar year 2002 in the consumer loan portfolio at one of its Banks. Losses at that Bank were incurred because of previous weaknesses in credit evaluation and collateral valuation.

Real estate mortgage loans constitute 22.8% of outstanding loans. Management considers these loans to have minimal risk due to the fact that these loans represent conventional residential real estate mortgages where the amount of the original loan does not exceed 85% of the appraised value of the collateral.

The allowance for loan losses reflects an amount which, in management's judgment, is adequate to provide for potential loan losses. Management's determination of the proper level of the allowance for loan losses is based on the ongoing analysis of the credit quality and loss potential of the portfolio, actual loan loss experience relative to the size and characteristics of the portfolio, changes in composition and risk characteristics of the portfolio and anticipated impacts of national and regional economic policies and conditions. Senior management and the Board of Directors of each of the Banks review the adequacy of the allowance for loan losses on a monthly basis.

Management considers the year-end allowance appropriate and adequate to cover possible losses in the loan portfolio; however, management's judgment is based upon a number of assumptions about future events, which are believed to be reasonable, but which may or may not prove valid. Thus, there can be no assurance that charge-offs in future periods will not exceed the allowance for loan losses or that additional increases in the loan loss allowance will not be required.

| | 9. | Investments.
| | -- | ------------

As of December 31, 2002, the securities portfolio comprised approximately 6.8% of the Company's assets, while loans comprised approximately 78.5% of the Company's assets. The Banks invest primarily in obligations of the United States or obligations guaranteed as to principal and interest by the United States, other taxable securities and in certain obligations of states and municipalities. In addition, CNB, Tarpon and Cumberland enter into Federal Funds transactions with its principal correspondent banks, and acts as a net seller of such funds. The sale of Federal Funds amounts to a short-term loan from CNB, Tarpon or Cumberland to another bank.

The following table presents, for the years ended December 31, 2002 and 2001, the approximate market value of the Company's investments, classified by category and by whether they are considered available-for-sale or held-to-maturity ($ in 000's):

|Investment Category                                  | December 31,
|---------------------------------------------------- | ------------
|Available-for-Sale:                                  | 2002        
|Obligations of U.S. Treasury and other U.S. Agencies | $           
|State, Municipal and County Securities               |             
|FRB and FHLB Stock                                   |             
|Equity Security                                      |             
|Total                                                | $           

Held-to-Maturity

As of December 31, 2002 there were no securities categorized as held-to-maturity.

The following table indicates, for the year ended December 31, 2002, the amount of investments, appropriately classified, due in (i) one year or less, (ii) one to five years, (iii) five to ten years, and (iv) over ten years.

|Investment Category                                       |       
|--------------------------------------------------------- | ------
|Available-for-Sale:                                       | Amount
|Obligations of U.S. Agencies                              | $     
|0 to 1 year                                               |       
|Over 1 through 5 years                                    |       
|Over 5 through 10 years                                   |       
|State, Municipal and County Securities(1)                 |       
|0 to 1 year                                               |       
|Over 1 through 5 years                                    |       
|Over 5 through 10 years                                   |       
|Over 10 years                                             |       
|No maturity                                               |       
|Total                                                     | $     
|1The average weighted yield is on a tax-equivalent basis.
|Held-to-Maturity                                          |       

As of December 31, 2002, there were no securities categorized as held-to-maturity.

| | 10. | Return on Equity and Assets.
| | --- | ----------------------------

Returns on average consolidated assets and average consolidated equity for the year ended December 31, 2002 and 2001 were as follows:

|                                                                                               | 2002                    | 2001                       
|---------------------------------------------------------------------------------------------- | ----------------------- | ---------------------------
|Return on average assets
Return on average equity
Equity to assets ratio
Dividend payout ratio | .20%
3.51%
7.24%
37.99% | .13%
1.74%
7.74%
57.48%    
|                                                                                               | 11.                     | Asset/Liability Management.

The Banks seek to manage assets and liabilities to provide a satisfactory, consistent level of profitability within the framework of established cash, loan investment, borrowing and capital policies. Certain of their officers are responsible for monitoring policies and procedures that are designed to ensure acceptable composition of the asset/liability mix, stability and leverage of all sources of funds while adhering to prudent banking practices. Management seeks to stimulate asset growth primarily through growth of core deposits of all categories made by individuals, partnerships and corporations. The respective managements of the Banks invest the largest portion of their assets in commercial, consumer and real estate loans.

The management of each of the Banks monitors its asset/liability mix on a daily basis. The Board of Directors of each of the Banks receives a monthly report reflecting interest-sensitive assets and interest-sensitive liabilities. The objective of this policy is to control interest-sensitive assets and liabilities so as to minimize the impact of substantial movements in interest rates on their respective earnings.

| | 12. | Employees.
| | --- | ----------

As of March 28, 2003, the Banks employed 83 full-time and eight part-time employees. The Company had one full-time employee. Management of each of the Banks believes that its employee relations are good. There are no collective bargaining agreements covering any of the Banks' employees.

| | 13. | Supervision and Regulation.
| | --- | ---------------------------

The Company and the Banks operate in a highly regulated environment, and their business activities are governed by statute, regulation and administrative policies. The business activities of the Company and the Banks are closely supervised by a number of state and federal regulatory agencies, including the Fed, the OCC, the Georgia Department and the Federal Deposit Insurance Corporation ("FDIC").

Regulation of the Company

The Company is regulated by the Fed under the Federal Bank Holding Company Act of 1956, as amended, among other acts, by the Financial Services Modernization Act of 1999 ("Bank Holding Company Act"), which requires every bank holding company to obtain the prior approval of the Fed before acquiring more than 5% of the voting shares of any bank or all or substantially all of the assets of a bank, and before merging or consolidating with another bank holding company. The Fed (pursuant to regulation and published statements) has maintained that a bank holding company must serve as a source of financial strength to its subsidiary banks. In adhering to the Fed policy, the Company may be required to provide financial support to a subsidiary bank at a time when, absent such Fed policy, the Company may not deem it advisable to provide such assistance. A bank holding company is generally prohibited from acquiring control of any company which is not a bank and from engaging in any business other than the business of banking or managing and controlling banks.

Pursuant to Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the "Riegle-Neal Act"), effective September 29, 1995, an adequately capitalized and adequately managed bank holding company may acquire a bank across state lines, without regard to whether such acquisition is permissible under state law. A bank holding company is considered to be "adequately capitalized" if it meets all applicable federal regulatory capital standards.

While the Riegle-Neal Act precludes a state from entirely insulating its banks from acquisition by an out-of-state holding company, a state may still provide that a bank may not be acquired by an out-of-state company unless the bank has been in existence for a specified number of years, not to exceed five years. Additionally, the Fed is directed not to approve an application for the acquisition of a bank across state lines if (i) the applicant bank holding company, including all affiliated insured depository institutions, controls, or after the acquisition would control, more than 10% of the total amount of deposits of all insured depository institutions in the United States (the "ten percent concentration limit") or (ii) the acquisition would result in the holding company controlling 30% or more of the total deposits of insured depository institutions in any state in which the holding company controlled a bank or branch immediately prior to the acquisition (the "thirty percent concentration limit"). States may waive the thirty percent concentration limit, or may make same more or less restrictive, so long as they do not discriminate against out-of-state bank holding companies.

The Riegle-Neal Act also provides that, beginning on June 1, 1998, banks located in different states may merge and operate the resulting institution as a bank with interstate branches. However, a state may (i) prevent interstate branching through mergers by passing a law prior to June 1, 1998 that expressly prohibits mergers involving out-of-state banks or (ii) permit such merger transactions prior to June 1, 1998. Under the Riegle-Neal Act, an interstate merger transaction may involve the acquisition of a branch of an insured bank without the acquisition of the Bank itself, but only if the law of the state in which the branch is located permits this type of transaction.

A state may impose certain conditions on a branch of an out-of-state bank resulting from an interstate merger so long as such conditions do not have the effect of discriminating against out-of-state banks or bank holding companies, other than on the basis of a requirement of nationwide reciprocal treatment. The ten percent concentration limit and the thirty percent concentration limit described above, as well as the rights of the states to modify or waive the thirty percent concentration limit, apply to interstate bank mergers in the same manner as they apply to the acquisition of out-of-state banks.

A bank resulting from an interstate merger transaction may retain and operate any office that any bank involved in the transaction was operating immediately before the transaction. After completion of the transaction, the resulting bank may establish or acquire additional branches at any location where any bank involved in the transaction could have established or acquired a branch.

The Riegle-Neal Act also provides that the appropriate federal banking agency may approve an application by a bank to establish and operate an interstate branch in any state that has in effect a law that expressly permits all out-of-state banks to establish and operate such a branch.

In response to the Riegle-Neal Act, Georgia adopted the Georgia Interstate Banking Act, effective July 1, 1995. The Georgia Interstate Banking Act provides that (i) interstate acquisitions of institutions located in Georgia will be permitted in states which also allow national interstate acquisitions, and (ii) interstate acquisitions of institutions located in Georgia will be permitted by institutions located in states which allot national interstate acquisitions.

Additionally, in February 1996, Georgia adopted the "Georgia Interstate Branching Act," which permits Georgia-based banks and bank holding companies owning or acquiring banks outside of Georgia and all non-Georgia banks and bank holding companies owning or acquiring banks in Georgia the right to merge any lawfully-acquired bank into an interstate branch network. The Georgia Interstate Branching Act also allows banks to establish de novo branches on a limited basis beginning July 1, 1996. Beginning July 1, 1998, the number of de novo branches that may be established is no longer limited, as described below.

The Company is also regulated by the Georgia Department under the Georgia Bank Holding Company Act, which requires every Georgia bank holding company to obtain the prior approval of the Georgia Department before acquiring more than 5% of the voting shares of any bank or all or substantially all of the assets of a bank or before merging or consolidating with any other bank holding company. Effective July 1, 1999, a Georgia bank holding company owning a bank that does a lawful business in Georgia is allowed to acquire control of a bank through formation of a de novo bank in Georgia, provided that it obtains required departmental approval and any required federal approval. Under this legislation, a bank holding company may merge or consolidate a de novo bank that it had established, notwithstanding that it is less than three years old, into another bank owned by that holding company. However, no out-of-state bank holding company may enter Georgia to do banking business through the formation of a de novo bank.

As a bank holding company, the Company is required to file with the Fed and the Georgia Department an annual report of its operations at the end of each fiscal year and such additional information as the Fed may require pursuant to the Act. The Fed may also make examinations of the Company and each of its subsidiaries.

On November 12, 1999, President Clinton signed into law legislation which allows bank holding companies to engage in a wider range of non-banking activities, including greater authority to engage in securities and insurance activities. Under the Gramm-Leach-Bliley Act, a bank holding company that elects to become a financial holding company may engage in any activity that the Federal Reserve, in consultation with the Secretary of the Treasury, determines by regulation or order is: (1) financial in nature; (2) incidental to any such financial activity; or (3) complementary to any such financial activity and does not pose a substantial risk to the safety or soundness of depository institutions or the financial system generally. The Gramm-Leach-Bliley Act makes significant changes in United States banking law, principally by repealing restrictive provisions of the 1933 Glass-Steagall Act. The Gramm-Leach-Bliley Act specifies certain activities that are deemed to be financial in nature, including lending, exchanging, transferring, investing for others, or safeguarding money or securities; underwriting and selling insurance; providing financial, investment or economic advisory services; underwriting, dealing in or making a market in, securities; and any activity currently permitted for bank holding companies by the Federal Reserve under Section 4(c)(8) of the Bank Holding Company Act. The Gramm-Leach-Bliley Act does not authorize banks or their affiliates to engage in commercial activities that are not financial in nature. A bank holding company may elect to be treated as a financial holding company only if all depository institution subsidiaries of the holding company are well-capitalized, well-managed and have at least a satisfactory rating under the Community Reinvestment Act. National banks are also authorized by the Gramm-Leach-Bliley Act to engage, through "financial subsidiaries," in any activity that is permissible for a financial holding company and any activity that the Secretary of the Treasury, in consultation with the Federal Reserve, determines is financial in nature or incidental to any such financial activity, except: (1) insurance underwriting; (2) real estate development or real estate investment activities, unless otherwise permitted by law; (3) insurance company portfolio investments; and (4) merchant banking. The authority of a national bank to invest in a financial subsidiary is subject to a number of conditions, including, among other things, requirements that the bank must be well-managed and well-capitalized, after deducting from the bank's capital outstanding investments in financial subsidiaries.

The Company is also subject to the reporting and other requirements of the Securities Exchange Act of 1934, which include the filing of annual, quarterly and other reports with the Securities and Exchange Commission ("SEC"), as well as the proxy rules under such Act.

Regulation of the Banks

As national banks, the Banks are subject to the supervision of the OCC and, to a limited extent, the FDIC and the Fed. With respect to expansion, national banks situated in the State of Georgia are now allowed, with required regulatory approval, to establish de novobranches in an unlimited number of counties within the State of Georgia if they are subsidiary bank(s) of bank holding companies then engaged in banking business in the State of Georgia. As national banks, each of the Banks is subject to the Georgia banking and usury laws restricting the amount of interest which it may charge in making loans or other extensions of credit.

Loans and extensions of credit by national banks are subject to legal lending limitations. Under federal law, a national bank may grant unsecured loans and extensions of credit in an amount of up to 15% of its unimpaired capital and surplus to any person. In addition, a national bank may grant loans and extensions of credit to a single person in an amount up to 10% of its unimpaired capital and surplus, provided that the transactions are fully secured by readily marketable collateral having a market value determined by reliable and continuously available price quotations. This 10% limitation is separate from, and in addition to, the 15% limitation for unsecured loans. Loans and extensions of credit may exceed the general lending limit if they qualify under one of several exceptions. Such exceptions include certain loans or extensions of credit arising from the discount of commercial or business paper, the purchase of bankers' acceptances, loans secured by documents of title, loans secured by U.S. obligations, and loans to or guaranteed by the federal government.

The Company and the Banks are required to comply with capital adequacy standards established by the Fed in the case of the Company, and the OCC, in the case of the Banks. The Fed has promulgated two basic measures of capital adequacy for bank holding companies: a risk-based measure and a leverage measure. All applicable capital standards must be satisfied for a bank holding company to be considered in compliance.

The risk-based capital standards are designed to make regulatory capital requirements more sensitive to differences in risk profile among banks and bank holding companies, to account for off-balance-sheet-exposure, and to minimize disincentives for holding liquid assets. Assets and off balance-sheet items are assigned to broad risk categories, each with appropriate weights. The resulting capital ratios represent capital as a percentage of total risk-weighted assets and off-balance-sheet items.

The minimum guideline for the ratio (the "Total Risk-Based Capital Ratio") of total capital ("Total Capital") to risk-weighted assets (including certain off-balance-sheet items, such as standby letters of credit) is 8%. At least half of Total Capital must be comprised of common stock, minority interests in the equity accounts of consolidated subsidiaries, non-cumulative perpetual preferred stock, and a limited amount of cumulative perpetual preferred stock, less goodwill and certain other intangible assets ("Tier 1 Capital"). The remainder may consist of subordinated debt, other preferred stock, and a limited amount of loan loss reserves ("Tier 2 Capital"). At December 31, 2002, the Company's consolidated Total Risk-Based Ratio and its Tier 1 Risk-Based Capital Ratio (i.e., the ratio of Tier 1 Capital to risk-weighted assets) were 10.6% and 9.4% respectively.

In addition, the Fed has established minimum leverage ratio guidelines for bank holding companies. These guidelines provide for a minimum ratio (the "Leverage Ratio") of Tier 1 Capital to average assets, less goodwill and certain other intangible assets, of 3% for bank holding companies that meet certain specified criteria, including those having the highest regulatory rating. All other bank holding companies generally are required to maintain a Leverage Ratio of at least 3%, plus an additional cushion of 100 to 200 basis points. The Company's Leverage Ratio at December 31, 2002 was 7.3%. The guidelines also provide that bank holding companies experiencing internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the minimum supervisory levels without significant reliance on intangible assets. Furthermore, the Federal Reserve has indicated that it will consider a "tangible Tier 1 Capital Leverage Ratio" (deducting all intangibles) and other indicia of capital strength in evaluating proposals for expansion or new activities.

Each of the Banks was in compliance with applicable minimum capital requirements as of December 31, 2002. The Company has not been advised by any federal regulator of any specific minimum capital ratio requirement applicable to it or the Banks.

Failure to meet capital guidelines could subject the Banks to a variety of enforcement remedies, including issuance of a capital directive, the termination of deposit insurance by the FDIC, a prohibition on the taking of brokered deposits and certain other restrictions on its business. As described below, substantial additional restrictions can be imposed upon FDIC-insured depository institutions that fail to meet applicable capital requirements.

Under the Federal Deposit Insurance Act ("FDIA"), a depository institution insured by the FDIC can be held liable for any loss incurred by, or reasonably expected to be incurred by, the FDIC after August 9, 1989, in connection with (i) the default of a commonly controlled FDIC-insured depository institution or (ii) any assistance provided by the FDIC to any commonly controlled FDIC-insured depository institution "in danger of default." "Default" is defined generally as the appointment of a conservator or receiver, and "in danger of default" is defined generally as the existence of certain conditions indicating that a default is likely to occur in the absence of regulatory assistance. The FDIC's claim for damages is superior to claims of shareholders of the insured depository institution or its holding company, but is subordinate to claims of depositors, secured creditors and holders of subordinated debt (other than affiliates) of the commonly controlled insured depository institution. As a result, any loss suffered by the FDIC in respect of any of these subsidiaries would likely result in assertion of the cross-guarantee provisions, the assessment of such estimated losses against the depository institution's banking or thrift affiliates, and a potential loss of the investment in such other subsidiary depository institution.

FDIA establishes a system of prompt corrective action to resolve the problems of undercapitalized institutions. Under this system, which became effective in December 1992, the federal banking regulators are required to establish five capital categories well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically under-capitalized) and to take certain mandatory supervisory actions, and are authorized to take other discretionary actions, with respect to institutions in the three undercapitalized categories, the severity of which will depend upon the capital category in which the institution is placed. Generally, subject to a narrow exception, FDIA requires the banking regulator to appoint a receiver or conservator for an institution that is critically undercapitalized. The federal banking regulators have specified by regulation the relevant capital level for such category.

As national banks, the Banks are subject to examination and review by the OCC. This examination is typically completed on-site at least annually and is subject to off-site review as well. The Banks submit to the OCC quarterly reports of condition, as well as such additional reports as may be required by the national banking laws.

In the wake of the tragic events of September 11th, on October 26, 2001, President Bush signed the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001. Under the USA PATRIOT Act, financial institutions are subject to prohibitions against specified financial transactions and account relationships as well as enhanced due diligence and "know your customer" standards in their dealings with foreign financial institutions and foreign customers. For example, the enhanced due diligence policies, procedures and controls generally require financial institutions to take reasonable steps:

- to conduct enhanced scrutiny of account relationships to guard against money laundering and report any suspicious transactions;
- to ascertain the identity of the nominal and beneficial owners of, and the source of funds deposited into, each account as needed to guard against money laundering and report any suspicious transactions;
- to ascertain for any foreign bank, the shares of which are not publicly traded, the identity of the owners of the foreign bank and the nature and extent of the ownership interest of each such owner; and
- to ascertain whether any foreign bank provides correspondent accounts to other foreign banks and, if so, the identity of those foreign banks and related due diligence information.

Under the USA PATRIOT Act, financial institutions must establish anti-money laundering programs. The USA PATRIOT Act sets forth minimum standards for these programs, including:

- the development of internal policies, procedures and controls;
- the designation of a compliance officer;
- an ongoing employee training program; and
- an independent audit function to test the programs.

Pursuant to the mandate of the USA PATRIOT Act, the Secretary of the Treasury issued regulations effective April 24, 2002, applicable to financial institutions. Because all federally insured depository institutions are required to have anti-money laundering programs, the regulations provide that a financial institution which is subject to regulation by a "federal functional" is in compliance with the regulations if it complies with the rules of its primary federal regulator governing the establishment and maintenance of anti-money laundering programs.

Under the authority of the USA PATRIOT Act, the Secretary of the Treasury adopted rules on September 26 , 2002 increasing the cooperation and information sharing between financial institutions, regulators and law enforcement authorities regarding individuals, entities and organizations engaged in, or reasonably suspected based on credible evidence of engaging in, terrorist acts or money laundering activities. Under the new rules, a financial institution is required to:

- expeditiously search its records to determine whether it maintains or has maintained accounts, or engaged in transactions with individuals or entities, listed in a request submitted by the Financial Crimes Enforcement Network ("FinCEN");
- notify FinCEN if an account or transaction is identified;
- designate a contact person to receive information requests;
- limit use of information provided by FinCEN to: (1) reporting to FinCEN, (2) determining whether to establish or maintain an account or engage in a transaction and (3) assisting the financial institution in complying witli the Bank Secrecy Act; and
- maintain adequate procedures to protect the security and confidentiality of FinCEN requests.

Under the new rules, a financial institution may also share information regarding individuals, entities, organizations and countries for purposes of identifying and, where appropriate, reporting activities that it suspects may involve possible terrorist activity or money laundering. Such information-sharing is protected under a safe harbor if the financial institution:

- notifies FinCEN of its intention to share information, even when sharing with an affiliated financial institution;
- takes reasonable steps to verify that, prior to sharing, the financial institution or association of financial institutions with which it intends to share information has submitted a notice to FinCEN; and
- limits the use of shared information to identifying and reporting on money laundering or terrorist activities, determining whether to establish or maintain an account or engage in a transaction, or assisting it in complying with the Bank Security Act and maintains adequate procedures to protect the security and confidentiality of the information.

Any financial institution complying with these rules will not be deemed to have violated the privacy requirements discussed above.

The Secretary of the Treasury also adopted a new rule on September 26, 2002, intended to prevent money laundering and terrorist financing through correspondent accounts maintained by U.S. financial institutions on behalf of foreign banks. Under the new rule, financial institutions:

- are prohibited from providing correspondent accounts to foreign shell banks;
- are required to obtain a certification from foreign banks for which they maintain a correspondent account stating the foreign bank is not a shell bank and that it will not permit a foreign shell bank to have access to the U.S. account;
- must maintain records identifying the owner of the foreign bank for which they may maintain a correspondent account and its agent in the Unites States designated to accept services of legal process; and
- must terminate correspondent accounts of foreign banks that fail to comply with or fail to contest a lawful request of the Secretary of the Treasury or the Attorney General of the United States, after being notified by the Secretary or Attorney General.

The new rule applies to correspondent accounts established after October 28, 2002.

Any legislative changes could place the Company in more direct competition with other financial institutions, including mutual funds, securities brokerage firms, insurance companies and investment banking firms. The effect of any such legislation on the business of the Company cannot be accurately predicted. The Company cannot predict what other legislation might be enacted or what other regulations might be adopted, or if enacted or adopted, the effect thereof.

| | 14. | Monetary Policies.
| | --- | ------------------

The results of operations of the Banks are affected by credit policies of monetary authorities, particularly the Fed. The instruments of monetary policy employed by the Fed include open market operations in U.S. Government securities, changes in the discount rate on member bank borrowings, changes in reserve requirements against member bank deposits and limitations on interest rates which member banks may pay on time and savings deposits. In view of the changing conditions in the national economy and the money markets, as well as the effect of action by monetary and fiscal authorities, including the Fed, no prediction can be made as to possible future changes in interest rates, deposit levels, loan demand or the business and earnings of the Banks.

|Item 2. | Description of Property.
|------- | ------------------------

CNB owns its main banking facility located in an approximately 9,500 square foot building at 561 East Washington Avenue, Ashburn, Georgia 31714. The Hudson Avenue side of the property contains a house that has been remodeled and is used for various activities, including banking and civic functions. CNB invested approximately $1,141,396 in the construction of the building, landscaping and the purchase of security devices, the main vault, furniture and fixtures. For the purposes of opening its second branch in Turner County, CNB purchased, in July 1998, for $100,000, the real estate located at 131 Industrial Drive, Ashburn. CNB subsequently subdivided the parcel and disposed of a portion thereof, including a single family residence, for which CNB had no use. On the remaining land, CNB constructed a 1,500 square foot branch building with three drive-through windows and an automatic teller. The building opened on September 21, 1998.

On March 26, 1998, CNB purchased two parcels of land in St. Marys, Camden County, Georgia, for $241,074 for construction of its Camden County branch. The building was completed in September 1999, and is now owned by Cumberland.

On July 2, 1998, CNB purchased a .5 acre parcel of land in Cordele, Crisp County, Georgia, for $288,000. After receiving approval for the opening of the second Crisp County branch, CNB constructed a 5,600 square foot, two story, branch building, which opened in February 2000.

Upon its acquisition of Tarpon in February 2000, the Company acquired the real estate parcel containing a bank building from which Tarpon does business. The two story, 9,434 square foot facility located at 710 East Tarpon Avenue, Tarpon Springs, Florida, includes a four car drive-through, two story lobby and ATM machines.

|Item 3. | Legal Proceedings.
|------- | ------------------

On March 27, 2003, the Company and CNB were informed that the estate of a former customer of CNB and a company controlled by the estate have demanded that CNB pay to (a) the estate the sum of $2.0 million for an alleged intentional infliction of emotional distress with respect to the deceased former customer and (b) the company controlled by the estate the sum of $1.5 million as compensation for an alleged wrongful dishonor of the company's checks and intentional interference with contractual rights and business relations. As of the date of this report, no complaint has been filed in connection with these demands. The Company believes these demands to be without merit and, if a complaint is filed in any court, CNB will defend vigorously against all claims.

Neither the Company nor any of the Banks is a party to, nor is any of their property the subject of, any other material pending legal proceeding which is not routine litigation that is incidental to the business or any other material legal proceeding.

|Item 4. | Submission of Matters to a Vote of Security Holders.
|------- | ----------------------------------------------------

No matter was submitted to a vote of security-holders during the fourth quarter of the fiscal year covered by this report.



PART II

|Item 5. | Market for Common Equity and Related Stockholder Matters.
|------- | ---------------------------------------------------------

The Registrant's Articles of Incorporation authorize it to issue up to 50,000,000 shares of common stock and 10,000,000 shares of preferred stock. As of April 9, 2003, 2,011,495 shares of Common Stock and 61,500 shares of Series A Preferred Stock were issued and outstanding to 1,271 holders of record. The shares of Series A Preferred Stock were purchased on April 9, 2003, by a group of directors at the purchase price of $10 per share. See Item 6 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity.

The Common Stock is traded on the OTC Bulletin Board. The high and low bid information for the Common Stock for each available quarter of 2001 and 2002, as reported by Bloomberg, L.P. is as follows:



|                  | High   | Low   
|----------------- | ------ | ------
|1st quarter 2001: | 10     | 8     
|2nd quarter 2001: | 10-1/2 | 10    
|3rd quarter 2001: | 9-3/4  | 9-3/10
|4th quarter 2001: | 10     | 9-3/10
|1st quarter 2002: | 10-1/8 | 9-3/4 
|2nd quarter 2002: | 10-7/8 | 9-7/8 
|3rd quarter 2002: | 10-1/8 | 9-1/2 
|4th quarter 2002: | 11-1/8 | 10-1/8

During the first quarters of 2002 and 2001, the Company declared and paid a dividend of $.10 per share. The declaration of future dividends is within the discretion of the Board of Directors and will depend, among other things, upon business conditions, earnings, the financial condition of the Banks and the Company, and regulatory requirements.

The Banks are restricted in their ability to pay dividends under the national banking laws and by regulations of the OCC. Pursuant to 12 U.S.C. Section 56, a national bank may not pay dividends from its capital. All dividends must be paid out of net profits then on hand, after deducting losses and bad debts. Payments of dividends out of net profits is further limited by 12 U.S.C. Section 60(a), which prohibits a bank from declaring a dividend on its shares of common stock until its surplus equals its stated capital, unless there has been transferred to surplus not less than 1/10 of the Banks' net profits of the preceding two consecutive half-year periods (in the case of an annual dividend). Pursuant to 12 U.S.C. Section 60(b), the approval of the OCC is required if the total of all dividends declared by the Company in any calendar year exceeds the total of its net profits for that year combined with its retained net profits for the preceding two years, less any required transfers to surplus.

The OCC's regulations, the allowance for loan and lease losses will not be considered an element of either "undivided profits then on hand" or "net profits." Further, under the regulations, a national bank may be able to use a portion of its capital surplus account as "undivided profits then on hand," depending on the composition of that account. In addition, the regulations clarify that dividends on preferred stock are not subject to the limitations of 12 U.S.C. Section 56, while explicitly making such dividends subject to the constraints of 12 U.S.C. Section 60. In general, the regulations do not diminish or impair a well-capitalized bank's ability to make cash payments to its shareholders in the form of a return of capital.

|Item 6. | Management's Discussion and Analysis of Financial Condition and Results of Operations.
|------- | --------------------------------------------------------------------------------------

Discussion of the financial condition and results of operations of the Company should be read in conjunction with the Company's consolidated financial statements and related notes which are included elsewhere herein.

|A. | Results of Operations.
|-- | ----------------------

Year Ended December 31, 2002 - Compared to Year Ended December 31, 2001

For the years ended December 31, 2002 and 2001, net income amounted to $505,565 and $316,811 respectively. For 2002, both basic and diluted income per share of Common Stock amounted to $.26, for 2001, basic and diluted income per share of Common Stock amounted to $.17 and $.16, respectively. Net income in 2002 increased by $188,754, primarily due to lower provision for loan losses. Asset quality during calendar year 2002 was considered weak. The ratio of problem assets to total assets as of the end of 2002 was approximately twice the national average. This was caused by weakness in the economy, as well as by the practice of using insufficiently rigorous underwriting criteria and the lack of proper monitoring at one of the Banks. Below is a brief explanation concerning revenue and expense items for the years ended December 31, 2002 and 2001:

|a.                             | Average earning assets for the year ended December 31, 2002 increased from $220.4 million to $240.2 million, representing an increaseof $19.8 million, or 9.0%. Below are various components of average earning assets for the periods indicated:                                                                           
|------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                               | December 31,                                                                                                                                                                                                                                                                                                                
|                               | 2002                                                                                                                                                                                                                                                                                                                        
|                               | (in 000's)                                                                                                                                                                                                                                                                                                                  
|Interest-bearing bank balances | $                                                                                                                                                                                                                                                                                                                           
|Federal funds sold             |                                                                                                                                                                                                                                                                                                                             
|Securities                     |                                                                                                                                                                                                                                                                                                                             
|Net loans                      | $                                                                                                                                                                                                                                                                                                                           
|Total average earning assets   | $                                                                                                                                                                                                                                                                                                                           
|b.                             | Despite the increase in average earning assets, the net interest income declined from $10,059,016 for the year ended December 31, 2001, to $9,568,083 for the year ended December 31, 2002. Below are various components of interest income and expense, as well as their yield/cost for the periods indicated ($ in 000's):
|Years Ended:                   | December 31, 2002Interest                                                                                                                                                                                                                                                                                                   
|                               | Income/Expense                                                                                                                                                                                                                                                                                                              
|Interest income:               |                                                                                                                                                                                                                                                                                                                             
|Interest-bearing bank balances | $                                                                                                                                                                                                                                                                                                                           
|Federal funds sold             |                                                                                                                                                                                                                                                                                                                             
|Securities                     |                                                                                                                                                                                                                                                                                                                             
|Loans                          | $                                                                                                                                                                                                                                                                                                                           
|Total                          | $                                                                                                                                                                                                                                                                                                                           
|Years Ended:                   | December 31, 2002Interest                                                                                                                                                                                                                                                                                                   
|                               | Income/Expense                                                                                                                                                                                                                                                                                                              
|Interest expense:              |                                                                                                                                                                                                                                                                                                                             
|NOW and money market deposit   | $                                                                                                                                                                                                                                                                                                                           
|Savings Deposits               |                                                                                                                                                                                                                                                                                                                             
|Time Deposits                  |                                                                                                                                                                                                                                                                                                                             
|Borrowings                     |                                                                                                                                                                                                                                                                                                                             
|Total                          | $                                                                                                                                                                                                                                                                                                                           
|Net interest income            | $                                                                                                                                                                                                                                                                                                                           
|Net Yield on earning assets    |                                                                                                                                                                                                                                                                                                                             

Net Interest Income

The Company's results of operations are determined by its ability to manage effectively interest income and expense, to minimize loan and investment losses, to generate non-interest income and to control non-interest expense. Since interest rates are determined by market forces and economic conditions beyond the control of the Company, the ability to generate net interest income is dependent upon the Company's ability to maintain an adequate spread between the rate earned on earning assets and the rate paid on interest-bearing liabilities, such as deposits and borrowings. Thus, net interest income is the key performance measure of income.

The Company's net interest income for 2002 was $9,568,083 as compared to $10,059,016 for 2001. Average yields on earning assets were 7.87% and 9.84% for the years ended December 31, 2002 and 2001, respectively. The average costs of funds for 2002 decreased to 4.17% from the 2001 cost of 5.74%. The net interest yield is computed by subtracting interest expense from interest income and dividing the resulting figure by average interest-earning assets. Net interest yields for the years ended December 31, 2002 and 2001 amounted to 3.98% and 4.56%, respectively. The decreasein net interest yield is due to the fact that the decrease in the yield on earning assets was of a higher magnitude than the decrease in the cost of funds. Net interest income for 2002 as compared to 2001, decreased by $490,933, despite the growth in average earning assets from $220.4 million in 2001 to $240.2 million in 2002. Note that the general decline in interest yields/costs during 2002 vis-a-vis 2001 was expected. The Fed, in its efforts to combat recession, lowered short-term rates significantly during 2002. As a consequence, and in order to remain competitive with other banks, the Company reduced its yield on earning assets.

Non-Interest Income

Non-interest income for the years ended December 31, 2002 and 2001, amounted to $1,767,500 and $1,560,301, respectively. As a percentage of average assets, non-interest income increased from .66% in 2001 to .68% in 2002. The primary reason for the increase in the above percentage is due to the fact that transactional accounts have increased materially.

The following table summarizes the major components of non-interest income for the periods therein indicated: ($ in 000's)

|Non-Interest Income             
|--------------------------------
|                                
|                                
|Service fees on deposit accounts
|Gain on sale of securities      
|Miscellaneous, other            
|Total non-interest income       

Non-Interest Expense

Non-interest expense increased from $6,831,292 during 2001 to $7,775,313 in 2002. As a percentage of total average assets, non-interest expense increased from 2.91% in 2001 to 3.00% in 2002. The primary reasons for the above increase were higher personnel expense and professional fees. The increase in professional fees is attributable to the increased need for such services due to the two formal agreements with the OCC and the financial advisory services arrangement with Trident. Below are the components of non-interest expense for the years 2001 and 2002: ($ in 000's)

|Non-Interest Expense                 
|-------------------------------------
|                                     
|                                     
|Salaries and other personnel benefits
|Data processing charges              
|Depreciation                         
|Professional Fees                    
|Repairs and maintenance              
|Other expenses                       
|Total non-interest expense           

During calendar year 2002, the Company experienced heavy loan losses due to the use of insufficiently rigorous underwriting criteria in one of the Banks, as well as due to the difficult economic times in the general economy. Loan charge offs for calendar years 2002 and 2001 amounted to $3,276,755 and $2,995,738, respectively. As a consequence of the heavy charge-offs in calendar years 2002 and 2001, provision ofr loan losses amounted to $2,772,000 and $4,399,500, respectively. The decline in the provision from calendar year 2001 to 2002 was the primary contributor to higher earnings in 2002. Underwriting criteria have been strengthened and are currently monitored on a regular basis at all three Banks.

From year end 2001 through year end 2002, the allowance for loan losses has increased from $4,242,268 to $4,323,848, an increase of $81,580. As a percent of total loans, the allowance has increased from 2.07% at December 31, 2001, to 2.13% at December 31, 2002. As of December 31, 2002, management considers the allowance for loan losses to be adequate to absorb possible future losses. However, there can be no assurance that charge-offs in future periods will not exceed the allowance for loan losses or that additional provisions to the allowance will not be required.

|B. | Interest Rate Sensitivity.
|-- | --------------------------

Net interest income, the Company's primary source of earnings, fluctuates with significant interest rate movements. To lessen the impact of these margin swings, the balance sheet should be structured so that re-pricing opportunities exist for both assets and liabilities in roughly equivalent amounts at approximately the same time intervals. Imbalances in these re-pricing opportunities at any point in time constitute interest rate sensitivity.

Interest rate sensitivity refers to the responsiveness of interest-bearing assets and liabilities to changes in market interest rates. The rate sensitive position, or gap, is the difference in the volume of rate sensitive assets and liabilities, at a given time interval. The general objective of gap management is to manage actively rate sensitive assets and liabilities so as to reduce the impact of interest rate fluctuations on the net interest margin. Management generally attempts to maintain a balance between rate sensitive assets and liabilities as the exposure period is lengthened to minimize the Company's overall interest rate risks. The asset mix of the balance sheet is continually evaluated in terms of several variables: yield, credit quality, appropriate funding sources and liquidity. To effectively manage the liability mix of the balance sheet focuses on expanding the various funding sources. The interest rate sensitivity position at year-end 2002 is presented below. Since all interest rates and yield do not adjust at the same velocity, the gap is only a general indicator of rate sensitivity ($ in 000's):

|                                               | Within
threemonths          | After
three
months
but
within
sixmonths | After
six
but
withinone year | After
one year
but
within
fiveyears | After
fiveyears | Total   
|---------------------------------------------- | --------------------------- | --------------------------------------- | ---------------------------- | ----------------------------------- | --------------- | --------
|                                               | EARNING ASSETS             
|Interest-bearing bank balances                 | $                           | - -                                     | $                            | 396                                 | $               | - -     
|Loans                                          |                             | 67,972                                  |                              | 15,787                              |                 | 24,430  
|Securities                                     |                             | 1,250                                   |                              | 1,000                               |                 | 1,003   
|Federal Funds Sold                             |                             | 18,036                                  |                              | - -                                 |                 | - -     
|Total earnings assets                          |                             | 87,248                                  |                              | 17,183                              |                 | 25,433  
|                                               | SUPPORTING SOURCES OF FUNDS
|Interest-bearing demand deposits and savings   | $                           | 45,648                                  | $                            | - -                                 | $               | - -     
|Certificates, Less than $100M                  |                             | 20,926                                  |                              | 27,269                              |                 | 46,966  
|Certificates, $100M and over                   |                             | 11,499                                  |                              | 10,088                              |                 | 14,036  
|Borrowings                                     |                             | 504                                     |                              | - -                                 |                 | - -     
|Total interest-bearing liabilities             |                             | 78,397                                  |                              | 37,357                              |                 | 61,002  
|Interest rate Sensitivity gap                  |                             | 8,851                                   |                              | (20,174)                            |                 | (35,569)
|Cumulative gap                                 |                             | 8,851                                   |                              | (11,323)                            |                 | (46,892)
|Interest rate sensitivity gap ratio            |                             | 1.11                                    |                              | .46                                 |                 | .42     
|Cumulative interest rate sensitivity gap ratio |                             | 1.11                                    |                              | .90                                 |                 | .73     

As evidenced by the table above, the Company is asset sensitive from zero to three months, liability sensitive from three to twelve months, and asset sensitive thereafter. In a declining interest rate environment, a liability sensitive position (a gap ratio of less than 1.0) is generally more advantageous since liabilities are re-priced sooner than assets. Conversely, in a rising interest rate environment, an asset sensitive position (a gap ratio over 1.0) is generally more advantageous, as earning assets are re-priced sooner than liabilities. With respect to the Company, an increase in interest rates would increase income from zero through three months and from one year on; it would reduce income from three months through one year. Conversely, a decline in interest rates would reduce income from zero through three months, and from one year on; it would increase income from three months through one year. This, however, assumes that all other factors affecting income remain constant.

As the Company continues to grow, management will continuously structure its rate sensitivity position to best hedge against rapidly rising or falling interest rates. The Banks' Asset/Liability Committees meet on a quarterly basis and develop management's strategy for the upcoming period. Such strategy includes anticipations of future interest rate movements. Interest rate risk will, nonetheless, fall within previously adopted policy parameters to contain any risk.

|C. | Regulatory Capital Adequacy.
|-- | ----------------------------

There are now two primary measures of capital adequacy for banks and bank holding companies: (i) risk-based capital guidelines; and (ii) the leverage ratio.

The risk-based capital guidelines measure the amount of a bank's required capital in relation to the degree of risk perceived in its assets and its off-balance sheet items. For example, cash and Treasury Securities are placed under a zero percent risk category while commercial loans are placed under the one hundred percent risk category. Banks are required to maintain a minimum risk-based capital ratio of 8.0%, with at least 4.0% consisting of Tier 1 capital. Under the risk-based capital guidelines, there are two "tiers" of capital. Tier 1 capital consists of common shareholders' equity, non-cumulative and cumulative (bank holding companies only), perpetual preferred stock and minority interests. Goodwill is subtracted from the total. Tier 2 capital consists of the allowance for loan losses, hybrid capital instruments, term subordinated debt and intermediate term preferred stock.

The second measure of capital adequacy relates to the leverage ratio. The OCC has established a 3.0% minimum leverage ratio requirement. Note that the leverage ratio is computed by dividing Tier 1 capital into total assets. Banks that are not rated CAMEL 1 by their primary regulator should maintain a minimum leverage ratio of 3.0% plus an additional cushion of at least 1 to 2%, depending upon risk profiles and other factors.

A new rule was recently adopted by the Fed, the OCC and the FDIC that adds a measure of interest rate risk to the determination of supervisory capital adequacy. In connection with this new rule, the agencies also proposed a measurement process to measure interest rate risk. Under this proposal, all items reported on the balance sheet, as well as off-balance sheet items, would be reported according to maturity, re-pricing dates and cash flow characteristics. A bank's reporting position would be multiplied by duration-based risk factors and weighted according to rate sensitivity. The net risk weighted position would be used in assessing capital adequacy. The objective of this complex proposal is to determine the sensitivity of a bank to various rising and declining interest rate scenarios. This proposal is under consideration by the Federal banking regulators.

The table below shows CNB, the largest subsidiary bank's, and the Company's regulatory capital ratios at December 31, 2002.

|CNB                            | December 31,2002 | Minimum
RegulatoryRequirement
|------------------------------ | ---------------- | -----------------------------
|Tier 1 Capital
Tier 2 Capital  | 10.1%1.3%        | 4.0%
N/A                     
|Total risk-based capital ratio | 11.4%            | 8.0%                         
|Leverage ratio                 | 8.3%             | 3.0%                         
|Company - Consolidated         | December 31,2002 | Minimum
RegulatoryRequirement
|Tier 1 Capital
Tier 2 Capital  | 9.4%1.2%         | 4.0%
N/A                     
|Total risk-based capital ratio | 10.6%            | 8.0%                         
|Leverage ratio                 | 7.3%             | 3.0%                         

The above ratios indicate that, in terms of regulatory requirements, the capital positions of the Company and the Banks are sound.

|D. | Liquidity.
|-- | ----------

Liquidity represents the ability to provide steady sources of funds for loan commitments and investment activities and to maintain sufficient funds to cover deposit withdrawals and payment of debt and operating obligations. These funds can be obtained by converting assets to cash or by attracting new deposits. The Company's primary source of liquidity comes from its ability to maintain and increase deposits through the Banks. Because management's focus was on improved asset quality and income, not on growing the Banks, deposits declined by approximately $5.0 million in 2002. Below are pertinent liquidity balances and ratios for the years ended December 31, 2002 and 2001. ($ in 000's)

|                                          | December 31
|----------------------------------------- | -----------
|                                          | 2002       
|Cash and cash equivalents                 | $          
|CDs, over $100,000 to total deposit ratio |            
|Loan to deposit ratio                     |            
|Securities to total assets ratio          |            
|Brokered deposits                         |            

On March 31, 2002, the Company obtained a ten-year $6 million line of credit facility from an unrelated financial institution. The Company's obligations under the facility are secured by the common stock of all three Banks and include annual principal payments beginning on April 1, 2003, each in an amount equal to 10% of the outstanding principal balance. As of December 31, 2002, the Company was determined by the lender to be in default of several of the facility's covenants applicable to the Company as a whole and two of the Banks.

On April 1, 2003, a principal payment of $504,200 was due under the facility. On April 9, 2003, to enable the Company to make the required principal payment, the Company issued 61,500 shares of preferred stock to its directors for an aggregate price of $615,000. The Company used the proceeds to make the principal payment and for working capital. See Item 5 - Market for Common Equity and Related Stockholder Matters.

In connection with the principal payment, the lender agreed to waive all existing defaults under the facility through June 30, 2003. The Company cannot give assurances that it will be able to avoid other defaults prior to June 30, 2003, or that it will not be in default after June 30, 2003. Such a default would have a material effect on the Company's liquidity and capital resources and could impair its ability to continue as a going concern.

|Item 7.                                                          | Financial Statements and Supplementary Data.                                                            
|---------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------
|The following financial statements are contained in this Item 7:
|                                                                 | Independent Auditors' Report                                                                            
|                                                                 | Consolidated Balance Sheets-as of December 31, 2002 and 2001                                            
|                                                                 | Consolidated Statements of Income-for the years ended December 31, 2002 and 2001                        
|                                                                 | Consolidated Statement of Changes in Stockholders' Equity-for the years ended December 31, 2002 and 2001
|                                                                 | Consolidated Statements of Cash Flows-for the years ended December 31, 2002 and 2001                    
|                                                                 | Notes to Consolidated Financial Statements                                                              





|TABLE OF CONTENTS                
|---------------------------------
|REPORT OF INDEPENDENT ACCOUNTANTS
|CONSOLIDATED FINANCIAL STATEMENTS
|                                 
|                                 
|                                 
|                                 
|                                 



Report of Independent Accountants



Board of Directors and Shareholders
Community National Bancorporation
Ashburn, Georgia

We have audited the accompanying consolidated balance sheets of Community National Bancorporation and subsidiaries as of December 31, 2002 and 2001, and the related consolidated statements of income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 2002. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Community National Bancorporation and subsidiaries at December 31, 2002 and 2001, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States.

/S/ Francis & Co., CPAs

Atlanta, Georgia
March 15, 2003





COMMUNITY NATIONAL BANCORPORATION
ASHBURN, GEORGIA
Consolidated Balance Sheets

|ASSETS                                                                                                                       
|-----------------------------------------------------------------------------------------------------------------------------
|                                                                                                                             
|                                                                                                                             
|Cash and due from banks                                                                                                      
|Interest bearing deposits in other banks                                                                                     
|Federal funds sold, net                                                                                                      
|Total cash and cash equivalents                                                                                              
|Securities:                                                                                                                  
|Available-for-sale at fair value                                                                                             
|Loans, net                                                                                                                   
|Property and equipment, net                                                                                                  
|Other real estate owned                                                                                                      
|Goodwill, net                                                                                                                
|Other assets                                                                                                                 
|Total Assets                                                                                                                 
|LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                         
|Liabilities:                                                                                                                 
|Deposits                                                                                                                     
|Non-interest bearing deposits                                                                                                
|Interest bearing deposits                                                                                                    
|Total deposits                                                                                                               
|Note payable                                                                                                                 
|Other liabilities                                                                                                            
|Total Liabilities                                                                                                            
|Commitments and Contingencies                                                                                                
|Shareholders' Equity                                                                                                         
|Common stock, no par value, 50,000,000 shares authorized, 2,011,495 (2002) and 1,932,381 (2001) shares issued and outstanding
|Retained earnings                                                                                                            
|Treasury stock                                                                                                               
|Accumulated other comprehensive income                                                                                       
|Total Shareholder's Equity                                                                                                   
|Total Liabilities and Shareholders' Equity                                                                                   

Refer to notes to the consolidated financial statements



COMMUNITY NATIONAL BANCORPORATION
ASHBURN, GEORGIA
Consolidated Statements of Income

|                                                             | For the Years Ended December 31,
|------------------------------------------------------------ | --------------------------------
|Interest Income:                                             | 2002                            
|Interest and fees on loans                                   | $                               
|Interest on investment securities                            |                                 
|Interest on deposits with other banks                        |                                 
|Interest on federal funds sold                               |                                 
|Total interest income                                        | $                               
|Interest Expense:                                            |                                 
|Interest on deposits and borrowings                          |                                 
|Net interest income                                          | $                               
|Provision for possible loan losses                           |                                 
|Net interest income after provision for possible loan losses | $                               
|Other Income:                                                |                                 
|Gain on sale/settlement of securities                        | $                               
|Service fees on deposit accounts                             |                                 
|Miscellaneous, other                                         |                                 
|Total other income                                           | $                               
|Other Expenses:                                              |                                 
|Salaries and benefits                                        | $                               
|Data processing expense                                      |                                 
|Professional fees                                            |                                 
|Depreciation                                                 |                                 
|Repairs and maintenance                                      |                                 
|Other operating expenses                                     |                                 
|Total other expenses                                         | $                               
|Income before income tax                                     | $                               
|Income tax                                                   |                                 
|Net income                                                   | $                               
|Basic earnings per share                                     | $                               
|Diluted earnings per share                                   | $                               
|Weighted Average Number of shares Outstanding:               |                                 
|Basic                                                        | $                               
|Diluted                                                      | $                               

Refer to notes to the consolidated financial statements.

COMMUNITY NATIONAL BANCORPORATION
ASHBURN, GEORGIA
Consolidated Statements of Changes in Shareholders' Equity
for the years ended December 31, 2002, 2001 and 2000

|                                       | Common Stock | Treasury Stock | Retained   | Accumulated
Other
Comprehensive | Total
Shareholders'
|-------------------------------------- | ------------ | -------------- | ---------- | ------------------------------- | -------------------
|                                       | Shares       | Amount         | Shares     | Amount                          | Earnings           
|Balance, 
December 31, 1999            | 1,534,711    | $              | 7,702,091  | - -                             | $                  
|Comprehensive income:
Net income, 2000 | - -          |                | - -        | - -                             |                    
|Unrealized gain, securities            | - -          |                | - -        | - -                             |                    
|Total comprehensive income             | - -          |                | - -        | - -                             |                    
|Dividends paid ($.10 per share)        | - -          |                | - -        | - -                             |                    
|Exercise of warrants/options           | 100,474      |                | 334,901    | - -                             |                    
|Issuance of common stock               | 188,322      |                | 2,824,830  | - -                             |                    
|Treasury stock purchased               | - -          |                |            | 1,872                           |                    
|Balance, 
December 31, 2000            | 1,823,507    | $              | 10,861,822 | 1,872                           | $                  
|Comprehensive income:
Net income, 2001 | - -          |                | - -        | - -                             |                    
|Unrealized gain, securities            | - -          |                | - -        | - -                             |                    
|Total comprehensive income             | - -          |                | - -        | - -                             |                    
|Dividends paid ($.10)                  | - -          |                | - -        | - -                             |                    
|Exercise of warrants/options           | 108,874      |                | 362,912    | - -                             |                    
|Treasury stock transaction, net        | - -          |                |            | 1,028                           |                    
|Balance,
December 31, 2001             | 1,932,381    | $              | 11,224,734 | 2,900                           | $                  
|Comprehensive income:
Net income, 2002 | - -          |                | - -        | - -                             |                    
|Unrealized Loss, securities            | - -          |                | - -        | - -                             |                    
|Total comprehensive income             | - -          |                | - -        | - -                             |                    
|Dividends paid ($.10 per share)        | - -          |                | - -        | - -                             |                    
|Exercise of warrants/options           | 79,114       |                | 263,718    | - -                             |                    
|Balance December 31, 2002              | 2,011,495    | $              | 11,488,452 | 2,900                           | $                  

Refer to notes to the consolidated financial statements.



COMMUNITY NATIONAL BANCORPORATION
ASHBURN, GEORGIA
Consolidated Statements of Cash Flows

|                                                                                  | For the Years Ended December 31,
|--------------------------------------------------------------------------------- | --------------------------------
|Cash flows from operating activities:                                             | 2002                            
|Net income                                                                        | $                               
|Adjustments to reconcile net income to net cash provided by operating activities: |                                 
|Amortization of goodwill                                                          |                                 
|Depreciation                                                                      |                                 
|Net accretion on securities                                                       |                                 
|(Gain) on sale or settlements of securities                                       |                                 
|Provisions for loan losses                                                        |                                 
|Decrease in other assets                                                          |                                 
|(Decrease) in liabilities                                                         |                                 
|Net cash provided by operating activities                                         | $                               
|Cash flows from investing activities:                                             |                                 
|(Purchase) of goodwill                                                            | $                               
|Decrease in OREO properties                                                       |                                 
|Proceeds from sale of securities                                                  |                                 
|Proceeds from maturities and paydowns of securities                               |                                 
|Purchase of investment securities                                                 |                                 
|Net increase in loans                                                             |                                 
|Sale of property and equipment                                                    |                                 
|Purchase of property and equipment                                                |                                 
|Net cash used in investing activities                                             | $                               
|Cash flows from financing activities:                                             |                                 
|Increase in borrowings                                                            | $                               
|Exercise of options, warrants                                                     |                                 
|Sale of stock                                                                     |                                 
|Sale/(purchase) of treasury stock                                                 |                                 
|Payment of dividends                                                              |                                 
|(Decrease) in customer deposits                                                   |                                 
|Net cash used by financing activities                                             | $                               
|Net increase in cash and cash equivalents                                         | $                               
|Cash and cash equivalents, 
beginning of period                                   |                                 
|Cash and cash equivalents, end period                                             | $                               
|Supplemental Information:                                                         |                                 
|Income taxes paid                                                                 | $                               
|Interest paid                                                                     | $                               

Refer to notes to the consolidated financial statements.

Note 1 - Organization of the Business

Community National Bancorporation, Ashburn, Georgia (the "Company") was organized in August, 1989 to serve as a holding company for a proposed de novo bank, Community National Bank, Ashburn, Georgia (the "Community Bank"). Community Bank was capitalized with approximately $3.4 million when it commenced operations in August, 1990. During 1998, the Company issued and sold 400,000 shares of its common stock at $10.00 per share. The public offering yielded approximately $4 million, all of which was invested in 1999, in a de novo bank, Cumberland National Bank, St. Marys, Georgia (the "Cumberland Bank"). In February, 2000, the Company purchased Tarpon Financial Corporation, Tarpon Springs, Florida, a one-bank holding company with respect to First National Bank, Tarpon Springs, Florida ("Tarpon Bank"). The acquisition was accounted for as a purchase as it resulted in approximately $1.9 million in goodwill. Community Bank, Cumberland Bank, and Tarpon Bank were all chartered by and are currently regulated by the Office of the Comptroller of the Currency ("OCC"). The subsidiary banks are primarily engaged in the business of obtaining deposits and providing commercial, consumer and real estate loans to the general public. Bank deposits are each insured up to $100,000 by the Federal Deposit Insurance Corporation (the "FDIC") subject to certain limitations imposed by the FDIC.

Note 2 - Summary of Significant Accounting Policies

Basis of Presentation and Reclassification.The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation. Such reclassifications had no impact on net income or shareholders' equity.

Basis of Accounting. The accounting and reporting policies of the Company conform to generally accepted accounting principles and to general practices in the banking industry. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and income and expenses during the reporting period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses and the valuation of real estate acquired in connection with foreclosure proceedings.

Cash and Due from Banks. The Company maintains deposit relationships with other banks which deposits amounts, at times, may exceed federally insured limits. The Company has never experienced any material losses from such deposit relationships.

Investment Securities. Investment securities that the Company has the positive intent and ability to hold to maturity are classified as held-to-maturity and are reported at amortized cost. Investment securities held for current resale are classified as trading securities and are reported at fair value, with unrealized gains and losses included in earnings. Investment securities not classified either as securities held-to-maturity or trading securities are classified as available-for-sale and reported at fair value; net unrealized gains or losses (net of related taxes) are excluded from earnings and are reported as accumulated other comprehensive income/(loss) within shareholders' equity. The classification of investment securities as held-to-maturity, trading or available-for-sale is determined at the date of purchase.

Realized gains and losses from sales of investment securities are determined based upon the specific identification method. Premiums and discounts are recognized in interest income using the level-yield method over the period to maturity.

Management periodically evaluates investment securities for other than temporary declines in value and records losses, if any, through an adjustment to earnings.

Loans, Interest and Fee Income on Loans. Loans are reported at their outstanding principal balance adjusted for charge-off, unearned discount, unamortized loan fees and the allowance for possible loan losses. Interest income is recognized over the term of the loan based on the principal amount outstanding. Non-refundable loan fees are taken into income to the extent they represent the direct cost of initiating a loan; the amount in excess of direct costs is deferred and amortized over the expected life of the loan.

Accrual of interest on loans is discontinued either when (i) reasonable doubt exists as to the full or timely collection of interest or principal or when (ii) a loan becomes contractually past due by 90 days or more with respect to interest or principal. When a loan is placed on non-accrual status, all interest previously accrued but not collected is reversed against current period interest income. Income on such loans is then recognized only to the extent that cash is received and where the future collection of principal is probable. Loans are returned to accruing status only when they are brought fully current with respect to interest and principal and when, in the judgment of management, the loans are estimated to be fully collectible as to both principal and interest.

Impaired loans are: (i) non-performing loans that have been placed on nonaccrual status; and (ii) loans which are performing according to all contractual terms of the loan agreement, but may have substantive indication of potential credit weakness. Accounting standards require impaired loans to be measured based on: (a) the present value of expected future cash flows discounted at the loan's original effective interest rate; or (b) the loan's observable market price; or (c) the fair value of the collateral if the loan is collateral dependent.

Allowance for Loan Losses. The allowance for loan losses (the "Allowance") represents management's estimate of probable losses inherent in the loan portfolio. The Allowance is established through provisions charged to operations. Loans deemed to be uncollectible are charged against the Allowance, and subsequent recoveries, if any, are credited to the Allowance. The adequacy of the Allowance is based on management's evaluation of the loan portfolio under current economic conditions, past loan loss experience, adequacy of underlying collateral, changes in the nature and volume of the loan portfolio, review of specific problem loans, and such other factors which, in management's judgment, deserve recognition in estimating loan losses. The evaluation for the adequacy of the Allowance is inherently subjective as it requires material estimates, including the amounts and timing of future cash flows expected to be received on impaired loans that may be susceptible to significant change. Various regulatory agencies, as an integral part of their examination process, periodically review the Company's Allowance. Such agencies may require the Company to recognize additions to the Allowance based on their judgments about information available to them at the time of their examination.

Property and Equipment. Building, furniture, equipment and leasehold improvements are stated at cost, net of accumulated depreciation. Land is carried at cost. Depreciation is computed using the straight line method over the estimated useful lives of the related assets. Maintenance and repairs are charged to operations, while major improvements are capitalized. Upon retirement, sale or other disposition of property and equipment, the cost and accumulated depreciation are eliminated from the accounts, and gain or loss is included in income from operations. The Company had no capitalized lease obligations at December 31, 2002 and 2001.

Other Real Estate. Other real estate represents property acquired through foreclosure proceedings. Other real estate is carried at the lower of: (i) cost; or (ii) fair value less estimated selling costs. Fair value is determined on the basis of current appraisals, comparable sales and other estimates of value obtained principally from independent sources. Any excess of the loan balance at the time of foreclosure over the fair value of the real estate held as collateral is treated as a loan loss and charged against the allowance for loan losses. Gain or loss on the sale of the property and any subsequent adjustments to reflect changes in fair value of the property are reflected in the income statement. Recoverable costs relating to the development and improvement of the property are capitalized whereas routine holding costs are charged to expense.

Income Taxes.Deferred income taxes (included in other assets) are provided for temporary differences between the tax basis of an asset or liability and its reported amount in the financial statements at the statutory tax rate. The components of other comprehensive income included in the consolidated statements of shareholders' equity have been computed based upon a 34% effective tax rate.

Cash and Cash Equivalents. For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks and federal funds sold. Generally, federal funds are purchased or sold for one day periods. The cash equivalents are readily convertible to known amounts of cash and present insignificant risk of changes in value due to maturity dates of 90 days or less.

Operating Segments. The Company determined, in accordance with Financial Accounting Standards No. 131, "Disclosure about Segment of an Enterprise and Related Information," that it is a single reportable entity since all its subsidiary banks have common regulatory authorities and all engage in the same line of business.

Income Per Share. Basic income per share is determined by dividing net income by the weighted-average number of common shares outstanding. Diluted income per share is determined by dividing net income by the weighted average number of common shares outstanding increased by the number of common shares that would be issued assuming the exercise of stock options. This also assumes that only options with an exercise price below the existing market price will be exercised. In computing net income per share, the Company uses the treasury stock method.

Stock-Based Compensation. The Company has elected to follow Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25"), and related interpretations, in accounting for its employee stock options rather than the alternative fair value accounting allowed by SFAS No. 123, "Accounting for Stock-Based Compensation." APB No. 25 provides that the compensation expense relative to the Company's employee stock options is measured based on the intrinsic value of the stock option. SFAS No. 123 requires companies that continue to follow APB No. 25 to provide a pro-forma disclosure of the impact of applying the fair value method of SFAS No. 123.

The following is a reconciliation of reported and pro-forma net income and net income per share for the periods below:

|                                  | Year Ended December 31,
|--------------------------------- | -----------------------
|                                  | 2002                   
|Net income, as reported           | $                      
|Stock-based compensation expense  |                        
|Pro-forma (fair value) net income | $                      
|Basic income per share:           |                        
|As reported                       | $                      
|Pro-forma                         | $                      
|Diluted income per share:         |                        
|As reported                       | $                      
|Pro-forma                         | $                      
|Pro-forma value of option         | $                      

The pro-forma (fair value) was estimated at the date of grant using the Black-Scholes option pricing model ("BLSC Model"). Note, however, that no warrants/options were granted during calendar years 2002, 2001 and 2000. BLSC Model requires the input of highly subjective assumptions, including the expected stock price volatility, and risk-free interest rates. Since changes in the subjective assumptions can materially affect the fair value estimate, in management's opinion, existing models (such as the BLSC Model) do not necessarily provide a reliable single measure of the fair value of the Company's options.

Below are details concerning the input assumptions utilized in conjunction with BLSC Model to produce the estimates for pro-forma (fair value) income for the periods below.

|                                        | Year Ended December 31,
|--------------------------------------- | -----------------------
|                                        | 2002                   
|Risk-free interest rate                 | 5.58%                  
|Dividend yield                          | .5%                    
|Volatility factor                       | 9.8%                   
|Weighted average life of warrant/option | 10 yrs                 

Goodwill and Other Intangibles. Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired in business combinations. On January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets", ("SFAS No. 142") and, on October 1, 2002, adopted Statement of Financial Accounting Standards No. 147, "Acquisitions of Certain Financial Institutions" ("SFAS No. 147"), which applies specifically to branch purchases that qualify as business combinations. Under SFAS No. 142 and No. 147, goodwill is no longer amortized but is subject to an annual impairment test. Under SFAS No. 142, the goodwill impairment assessment is performed at least annually. Based upon this assessment of the fair value of the reporting unit, the Company concluded the recorded value of goodwill was not impaired as of December 31, 2002.

Recent Accounting Pronouncements. In December 2001, the American Institute of Certified Public Accountants issued Statement of Position ("SOP") 01-6, "Accounting by Certain Entities (Including Entities With Trade Receivables) That Lend to or Finance the Activities of Others." SOP 01-6 reconciles the specialized accounting and financial reporting guidance in the existing Banks and Savings Institutions Guide, Audits of Credit Unions Guide, and Audits of Finance Companies Guide. The SOP eliminates differences in accounting and disclosure established by the respective guides and carries forward accounting guidance for transactions determined to be unique to certain financial institutions. Adoption of this pronouncement has not had a material impact on the Company's results of operations or financial position.

In October 2002, the Financial Accounting Standards Board ("FASB") issued SFAS No. 147, "Acquisitions of Certain Financial Institutions," which addresses accounting for the acquisition of certain financial institutions. The provisions of SFAS No. 147 rescind the specialized accounting guidance in paragraph 5 of SFAS No. 72 and would require unidentifiable intangible assets to be reclassified to goodwill if certain criteria are met. Financial institutions meeting the conditions outlined in SFAS No. 147 will be required to restate previously issued financial statements after September 30, 2002. The adoption of SFAS No. 147 has had no material impact on the Company's results of operations or financial position.

In December 2002, FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure," which amended SFAS No. 123, "Accounting for Stock-Based Compensation" to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based compensation. In addition, this statement amended the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the chosen method on reporting results. The provisions of SFAS No. 148 are effective for annual periods ending December 15, 2002, and for interim periods beginning after December 15, 2002.

In November 2002, FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." It addresses the accounting for the stand-ready obligation under guarantees. A guarantor is required to recognize a liability with respect to its stand-ready obligation under the guarantee even if the probability of future payments under the guarantee is remote. The initial liability will be measured as the fair value of the stand-ready obligation. Additionally, the Interpretation addresses the disclosure requirements for guarantees including the nature and terms of the guarantees, maximum potential for future amounts and the carrying amount of the liabilities. The disclosure requirements are effective for interim and annual financial statements ending after December 15, 2002. The initial recognition and measurement provisions are effective for all guarantees within the scope of Interpretation 45 issued or modified after December 31, 2002. Commercial letters of credit and other loan commitments, which are commonly thought of as guarantees of funds were not included in the scope of interpretation. The Company has made relevant disclosures in the current year financial statements. The Company does not expect the adoption of Interpretation No. 45 to have a material impact on its financials.

Note 3 - Federal Funds Sold

The subsidiary banks are required to maintain legal cash reserves computed by applying prescribed percentages to the various types of deposits. When the subsidiary banks' cash reserves are in excess of the required amounts, they may lend the excess to other banks on a daily basis. At December 31, 2002 and 2001, the subsidiary banks sold $18,036,000 and $17,008,000, respectively, to other banks through the federal funds market.

Note 4 - Securities Available-for-Sale

The amortized costs and estimated market values of securities available-for-sale as of December 31, 2002 follow:

|                       | Amortized | GrossUnrealized | Estimated
|---------------------- | --------- | --------------- | ---------
|Description            | Costs     | Gains           | Losses   
|U.S. Agency securities | $         | 12,681,569      | $        
|Municipal securities   |           | 3,116,362       |          
|FRB & FHLB stock       |           | 951,300         |          
|Equity Securities      |           | 82,594          |          
|Total Securities       | $         | 16,831,825      | $        

All national banks are required to hold FRB stock and all members of the Federal Home Loan Bank are required to hold FHLB stock. Since no ready market exists for either stock, both, FRB and FHLB stocks are reported at cost.

The amortized costs and estimated market values of securities available-for-sale as of December 31, 2001 follow:

|                       | Amortized | GrossUnrealized | Estimated
|---------------------- | --------- | --------------- | ---------
|Description            | Costs     | Gains           | Losses   
|U.S. Agency securities | $         | 11,397,123      | $        
|Municipal securities   |           | 2,916,714       |          
|FRB & FHLB stock       |           | 781,140         |          
|Equity Securities      |           | 82,594          |          
|Total Securities       | $         | 15,177,571      | $        

The amortized costs and estimated market values of securities available-for-sale at December 31, 2002, by contractual maturity, are shown in the following chart. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

|                                 | AmortizedCosts | EstimatedMarket Values
|-------------------------------- | -------------- | ----------------------
|Due in one year or less          | $              | 3,208,079             
|Due after one through five years |                | 9,365,912             
|Due after five through ten years |                | 2,652,890             
|Due after ten years              |                | 571,050               
|No maturity                      |                | 1,033,894             
|Total securities                 | $              | 16,831,825            

As of December 31, 2002 and 2001, securities with a par value of $6,118,000 and $3,440,000, respectively, were pledged to secure public funds, repurchase agreements, and for other purposes required or permitted by law.

During calendar year 2002, the Company sold securities in the amount of $3,549,212 and booked a gain of $3,342 from the above sale. No securities were sold during calendar years 2001 and 2000. The Company also recorded gains from settlement of securities; such gains amounted to $2,266, $2,800, and $0 for calendar years 2002, 2001 and 2000, respectively.

Note 5 - Loans

The composition of net loans by major loan category, as of December 31, 2002 and 2001, follows:

|                                    | December 31,
|----------------------------------- | ------------
|                                    | 2002        
|Commercial, financial, agricultural | $           
|Real estate - construction          |             
|Real estate - mortgage              |             
|Installment                         |             
|Loans, gross                        | $           
|Deduct:                             |             
|Allowance for loan losses           |             
|Loans, net                          | $           

The Company considers impaired loans to include all restructured loans, loans on which the accrual of interest had been discontinued and all other loans which are performing according to the loan agreement, but may have substantive indication of potential credit weakness. At December 31, 2002 and 2001, the total recorded investment in impaired loans, all of which had allowances determined in accordance with FASB Statements No. 114 and No. 118, amounted to approximately $25,363,935 and $12,947,528, respectively. The average recorded investment in impaired loans amounted to approximately $18,423,411 and $5,109,553 for the years ended December 31, 2002 and 2001, respectively. The allowance for loan losses related to impaired loans amounted to approximately $2,957,540 and $1,660,400 at December 31, 2002 and 2001, respectively. Interest income recognized on impaired loans for the years ended December 31, 2002 and 2001 amounted to $927,529 and $427,256, respectively. The amount of interest recognized on impaired loans using the cash method of accounting was not material for the years ended December 31, 2002 and 2001. Loans on non-accrual status at December 31, 2002 and 2001 had outstanding balances of $5,329,001 and $1,911,588, respectively. Interest recognized on non-accruing loans at December 31, 2002 and 2001 was not material. The Company has no commitments to lend additional funds to borrowers whose loans have been modified.

Note 6 - Allowance for Possible Loan Losses

The allowance for possible loan losses (the "Allowance") is a valuation reserve available to absorb future loan charge-offs. The Allowance is increased by provisions charged to operating expenses and by recoveries of loans which were previously written-off. The Allowance is decreased by the aggregate loan balances, if any, which were deemed uncollectible during the year.

Individual consumer loans are predominantly undersecured, and the allowance for possible losses associated with these loans has been established accordingly. The majority of the non-consumer loan categories are generally secured by real-estate, receivables, inventory, machinery, equipment, or financial instruments. The amount of collateral obtained is based upon management's evaluation of the borrower.

Activity within the Allowance account for the years ended December 31, 2002 and 2001 follows:

|                                                  | Years ended December 31,
|------------------------------------------------- | ------------------------
|                                                  | 2002                    
|Balance, beginning of year                        | $                       
|Add: Provision for loan losses                    |                         
|Add: Recoveries of previously charged off amounts |                         
|Total                                             | $                       
|Deduct: Amount charged-off                        |                         
|Balance, end of year                              | $                       

Note 7 - Property and Equipment

Building, furniture, equipment, land and land improvements are stated at cost less accumulated depreciation. Components of property and equipment included in the consolidated balance sheets at December 31, 2002 and 2001 follow:

|                              | Years ended December 31,
|----------------------------- | ------------------------
|                              | 2002                    
|Land                          | $                       
|Building                      |                         
|Leasehold improvements        |                         
|Furniture and equipment       |                         
|Property and equipment, gross | $                       
|Deduct:                       |                         
|Accumulated depreciation      |                         
|Property and equipment, net   | $                       

As of December 31, 2001, the caption "land", above, includes a lot for future expansion in the amount of $248,981. As of December 31, 2002 the above lot was sold.

Depreciation expense for the years ended December 31, 2002, 2001 and 2000 amounted to $490,077, $526,880 and $465,965, respectively. Depreciation is charged to operations over the estimated useful lives of the assets. The estimated useful lives and methods of depreciation for the principal items follow:

|Type of Asset                                            | Life in Years   | Depreciation Method                      
|-------------------------------------------------------- | --------------- | -----------------------------------------
|Furniture and equipment
Buildings
Leasehold improvements | 3 to 7
32, 39
5 | Straight-line
Straight-line
Straight-line

Note 8 - Commitments and Contingencies

In the normal course of business, there are various outstanding commitments to extend credit in the form of unused loan commitments and standby letters of credit that are not reflected in the consolidated financial statements. Since commitments may expire without being exercised, these amounts do not necessarily represent future funding requirements. The Company uses the same credit and collateral policies in making commitments as those it uses in making loans.

At December 31, 2002 and 2001, the Company had unused loan commitments of approximately $9.8 million and $10.7 million, respectively. Additionally, standby letters of credit of approximately $1,542,800 and $1,523,123 were outstanding at December 31, 2002 and 2001, respectively. The majority of these commitments are collateralized by various assets. No material losses are anticipated as a result of these transactions.

The Company and its subsidiaries are subject to claims and lawsuits which arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company and its subsidiaries.

Please refer to Note 15 concerning warrants and options earned by directors and executive officers.

Note 9 - Deposits

The following details deposit accounts at December 31, 2002and 2001:

|                              | December 31,
|----------------------------- | ------------
|                              | 2002        
|Non-interest bearing deposits | $           
|Interest bearing deposits:    |             
|NOW accounts                  |             
|Money Market accounts         |             
|Savings                       |             
|Time, less than $100,000      |             
|Time, $100,000 and over       |             
|Total deposits                | $           

At December 31, 2002 the scheduled maturities of all certificates of deposit were as follows:



|Year EndingDecember 31,        | Amount
|------------------------------ | ------
|2003
2004
2005
2006
2007
Total | $
$   

Note 10 - Borrowings

On March 30, 2001, the Company replace an existing loan with another one, increasing the loan balance by $1.0 million to $3.0 million ("Loan A"). The loan which was made by an unrelated financial institution ("Lender") has a rate of interest of prime less 1/2%, and the collateral provided by the Company consists of 100% of the voting shares of Cumberland Bank. Interest payments are due quarterly until March 31, 2003. Thereafter and beginning on April 1, 2003 through April 1, 2012, annual interest payments plus principal reductions are due. The annual principal reductions shall not be less than 10% of the highest outstanding loan balance. Until the loan was replaced by another loan on March 31, 2002, the Company and Cumberland Bank had not met the following affirmative and negative covenants:

1. Cumberland Bank's net charge-offs shall be less than .75% of average loans;
2. Cumberland Bank's non-performing loans shall be less than .75% of total assets;
3. Non-performing loans plus OREO properties shall be less than 2.0% of Cumberland Bank's assets; and
4. The Company's return on average assets, on a quarterly basis, shall not be less than .75%.

The Company discussed the above items with the Lender who, in turn, accepted the exceptions without further actions. As of December 31, 2002 and 2001, the principal balance on Loan A was $0 and $2,992,000.

On December 24, 2001, the Company executed another loan ("Loan B") with the above Lender. The rate of interest is at prime less 1/2%, but with a floor of 5.5%. The collateral consists of 100% of the voting shares of all three subsidiary banks. All other terms, including timing and amounts of payments, are similar to Loan A, above. Again, all affirmative and negative covenants were met with the exception of the four items in Loan A plus the following:

1. The Company's capital accounts shall not be less than $19.0 million.

The Company discussed the above exceptions with the Lender who, in turn, accepted the exceptions without further actions. As of December 31, 2002 and 2001, the outstanding balance of Loan B was $0 and $0, respectively.

On March 31, 2002 the Company replaced Loan A and Loan B with another loan (Loan C). Loan C paid-off Loan A and Loan B in full. Loan C is in the form of a line of credit with borrowing capacity of up to $6.0 million. Later, when Loan C balance reached $5,042,000, Lender would not permit additional advances until such time as all affirmative and negative covenants are met. The rate of interest on Loan C is at prime less 1/2%, but with a floor of 5.5%. The collateral consists of 100% of the voting shares of all three subsidiary banks. Loan C requires quarterly interest payments and a 10% principal reduction beginning on April 1, 2003. Loan C should be paid in full by April 1, 2012.

With respect to Loan C, as of December 31, 2002, the Company and its subsidiary banks met all affirmative and negative covenants with the following exceptions:

1. The Company was unable to maintain a quarterly and annual return on average assets of .75% and .60%, respectively.
2. Community Bank and Tarpon Bank were unable to maintain the ratio of net charge-offs to average loans at or below .75%, and
3. Cumberland Bank and Tarpon Bank were unable to maintain the ratio of non-performing loans plus OREO to total assets at or below 2.0%.

The Company is discussing the above exceptions with the Lender. As of December 31, 2002, the outstanding balance on Loan C was $5,042,000.

Note 11 - Shareholders' Equity

The Company currently has 50.0 million shares authorized: 2,011,495 and 1,932,381 shares outstanding at December 31, 2002 and 2001, respectively. In addition, the Company is authorized to issue up to 10.0 million shares of no-par value preferred stock. As of December 31, 2002 and 2001, no shares of preferred stock were issued and outstanding.

As of December 31, 2002, there were 100,000 warrants convertible into the Company's common stock on a one-to-one basis upon surrender of warrants together with a cash consideration of $10.00 per warrant. There were 73,834, 93,034 and 84,634 warrants exercised during calendar years 2002, 2001 and 2000, respectively. At December 31, 2002, there were 10,000 stock options convertible into the Company's common stock on a one-to-one basis upon surrender of stock options together with a cash consideration of $12.00 per option. During each of calendar years 2002, 2001 and 2000, 5,280, 15,840 and 15,840 stock options, respectively, were converted into the Company's common stock.

Note 12 - Interest on Deposits and Borrowings

A summary of interest expense for the years ended December 31, 2002, 2001 and 2000 follows:

|                                               | December 31,
|---------------------------------------------- | ------------
|                                               | 2002        
|Interest on NOW accounts                       | $           
|Interest on money market accounts              |             
|Interest on savings accounts                   |             
|Interest on CDs under $100,000                 |             
|Interest on CDs $100,000 and over              |             
|Interest on federal funds, FHLB and borrowings |             
|Total interest on deposits and borrowings      | $           

Note 13 - Other Operating Expenses

A summary of other operating expenses for the years ended December 31, 2002, 2001 and 2000 follows:

|                                     | December 31,
|------------------------------------ | ------------
|                                     | 2002        
|Stationary and supplies              | $           
|Regulatory fees                      |             
|Courier and postage                  |             
|Advertising and business development |             
|Utilities and telephone              |             
|Directors' fees                      |             
|Taxes and licenses                   |             
|Repossession and maintenance of OREO |             
|Goodwill amortization                |             
|All other operating expenses         |             
|Total other operating expenses       | $           

Note 14 - Income Taxes

As of December 31, 2002, 2001 and 2000, the Company's provision for income taxes consisted of the following:

|                   | December 31,
|------------------ | ------------
|                   | 2002        
|Current            | $           
|Deferred           |             
|Income tax expense | $           

The Company's provision for income taxes differs from the amounts computed by applying the federal income tax statutory rates to income before income taxes. The effective tax rate and the statutory federal income tax rate are reconciled as follows:

|                                                                                                                                                  | December 31,                     
|------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------
|                                                                                                                                                  | 2002                             
|Federal tax at statutory rate
State income tax, net of Federal benefit
Change in valuation allowance
Tax-exempt interest
Other
Effective tax rate | 34.0%
5.2%
5.5%
(10.1%)1.1%
35.7%

The tax effects of the temporary differences that comprise the net deferred tax assets at December 31, 2002 and 2001 are presented below:

|                             | December 31,
|---------------------------- | ------------
|                             | 2002        
|Deferred tax assets:         |             
|Allowance for loan losses    | $           
|Unrealized gain, securities  |             
|Deferred asset, depreciation |             
|Capitalized opening expenses |             
|Valuation reserve            |             
|Net deferred tax asset       | $           

There was a net change in the valuation allowance during the calendar years 2002 and 2001. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projection for future taxable income over the periods which the temporary differences resulting in the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of those deductible differences, net of the existing valuation allowance at December 31, 2002.

Note 15 - Related Party Transactions

Stock Warrants and Options. All outstanding warrants were issued to directors of either the Company, Community Bank, or Cumberland Bank. No stock warrants were granted during calendar years 2002, 2001 and 2000. At December 31, 2002, there were 100,000 warrants outstanding, all expiring in calendar year 2006. There were also 10,000 options outstanding at December 31, 2002, all expiring during calendar year 2006. No stock options were granted during calendar years 2002, 2001 and 2000. Please refer to Note 11 for additional information concerning warrants/options.

Borrowings and Deposits by Directors and Executive Officers. Certain directors, principal officers and companies with which they are affiliated are customers of and have banking transactions with the subsidiary banks in the ordinary course of business. As of December 31, 2002 and 2001, loans outstanding to directors, their related interests and executive officers aggregated $6,086,194 and $5,952,416, respectively. These loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the same time for comparable transactions with unrelated parties. In the opinion of management, loans to related parties did not involve more than normal credit risk or present other unfavorable features.

A summary of the related party loan transactions during the calendar years 2002 and 2001 follows:

|                           | Insider Loan Transactions
|-------------------------- | -------------------------
|                           | 2002                     
|Balance, beginning of year | $                        
|New loans                  |                          
|Less: Principal reductions |                          
|Balance, end of year       | $                        

Deposits by directors and their related interests, as of December 31, 2002 and 2001 approximated $2,345,821 and $2,744,246, respectively.

Note 16 - Employee Benefit Plans

A profit sharing plan (the "Plan") was established by the Company to provide for participation in profits by employees or their beneficiaries. The annual contribution to the Plan, not to exceed allowable deductions per tax laws and regulations, is determined by the Board of Directors. The Plan has a pre-determined formula for allocating contributions among participants and for distributing funds upon the occurrence of certain events. For the years ended December 31, 2002, 2001 and 2000, the Company contributed $0, $268,932, and $186,574, respectively, to the Plan. In addition, beginning with calendar year 2000, the Company offered a 401(k) plan in which it matched a portion of the employees' contribution. For the years ended December 31, 2002, 2001 and 2000, the Company contributed $41,642, $32,823 and $9,070, respectively, to the above plan.

Note 17 - Concentration of Credit

The substantial majority of the Company's loans are made to individuals and businesses located within the Company's primary service area (the "PSA"). The Company's PSA consists of the following counties and their surrounding counties: Turner, Georgia, Crisp, Georgia, Camden, Georgia and Pinellas, Florida. The ability of the majority of the Company's customers to honor their contractual loan obligations is dependent on economic conditions prevailing at the time in the Company's PSA.

Approximately sixty-three percent of the Company's loan portfolio is concentrated in loans secured by real estate, of which a substantial portion is secured by real estate in the Company's PSA. Accordingly, the ultimate collectibility of the loan portfolio is susceptible to changes in market conditions in the Company's PSA. The other significant concentrations of credit by type are set forth under Note 5.

The Company, as a matter of policy, does not generally extend credit to any single borrower or group of related borrowers in excess of 15% of the subsidiary banks' statutory capital, or approximately $3,250,000.

Note 18 - Fair Value of Financial Instruments

The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company's various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. SFAS No. 107, "Disclosure about Fair Values of Financial Instruments," excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

The following methods and assumptions were used by the Company in estimating fair values of financial instruments as disclosed herein:

Cash and Due from Banks, Interest-Bearing Deposits with Banks and Federal Funds Sold. The carrying amounts of cash and due from banks, interest-bearing deposits with banks, and federal funds sold approximate their fair value.

Available-for-Sale Securities. Fair values for securities are based on quoted market prices. Fair value for FRB stock and FHLB stock approximate their carrying values based on their redemption provisions.

Loans. The fair values of the Company's loans and lease financing have been estimated using two methods: (1) the carrying amounts of short-term and variable rate loans approximate fair values excluding certain credit card loans which are tied to an index floor; and (2) for all other loans, the discounting of projected future cash flows. When using the discounting method, loans are pooled in homogeneous groups with similar terms and conditions and discounted at a target rate at which similar loans would be made to borrowers at year end. In addition, when computing the estimated fair values for all loans, the allowance for loan losses is subtracted from the calculated fair values for consideration of credit issues.

Accrued Interest Receivable. The carrying amount of accrued interest receivable approximates the fair value.

Deposits. The carrying amounts of demand deposits and savings deposits approximate their fair values. The methodologies used to estimate the fair values of all other deposits are similar to the two methods used to estimate the fair values of loans. Deposits are pooled in homogeneous groups and the future cash flows of these groups are discounted using current market rates offered for similar products at year end.

Accrued Interest Payable. The carrying amount of accrued interest payable approximates the fair value.

Off-Balance Sheet Instruments. Fair values of the Company's off-balance sheet financial instruments are based on fees charged to enter into similar agreements. However, commitments to extend credit and standby letters of credit do not represent a significant value to the Company until such commitments are funded. The Company has determined that these instruments do not have a distinguishable fair value and no fair value has been assigned.

The following table presents the carrying amounts and fair values of the specified assets and liabilities held by the Company at December 31, 2002 and 2001. The information presented is based on pertinent information available to management as of December 31, 2002 and 2001. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued since that time, and the current estimated fair value of these financial instruments may have changed since that point in time.



|                                           | December 31, 2002 | December 31, 2001  
|------------------------------------------ | ----------------- | -------------------
|                                           | CarryingAmount    | EstimatedFair Value
|Financial assets:                          |                   |                    
|Cash and due from banks                    | $                 | 6,830,350          
|Interest bearing deposits with other banks |                   | 396,000            
|Federal funds sold                         |                   | 18,036,000         
|Securities available-for-sale              |                   | 17,197,932         
|Loans                                      |                   | 198,412,193        
|Accrued interest receivable                |                   | 2,916,941          
|Financial liabilities:                     |                   |                    
|Deposits                                   | $                 | 227,528,613        
|Borrowings                                 |                   | 5,042,000          
|Accrued interest payable                   |                   | 922,237            

Note 19 - Regulatory Matters

The Company is governed by various regulatory agencies. Bank holding companies and their nonbanking subsidiaries are regulated by the FRB. National banks are primarily regulated by the OCC. All federally-insured banks are also regulated by the FDIC. The Company's banking subsidiaries include three national banks, all insured by the FDIC.

Various requirements and restrictions under federal and state laws regulate the operations of the Company. These laws, among other things, require the maintenance of reserves against deposits, impose certain restrictions on the nature and terms of the loans, restrict investments and other activities, and regulate mergers and the establishment of branches and related operations. The ability of the parent company to pay cash dividends to its shareholders and service debt may be dependent upon cash dividends from its subsidiary banks. Each subsidiary bank is subject to limitations under federal law in the amount of dividends it may declare. At December 31, 2002, two of the three subsidiary banks' retained earnings were not available for dividend declaration without prior regulatory approval.

The banking industry is also affected by the monetary and fiscal policies of regulatory authorities, including the FRB. Through open market securities transactions, variations in the discount rate, the establishment of reserve requirements and the regulation of certain interest rates payable by member banks, the FRB exerts considerable influence over the cost and availability of funds obtained for lending and investing. Changes in interest rates, deposit levels and loan demand are influenced by the changing conditions in the national economy and in the money markets, as well as the effect of actions by monetary and fiscal authorities. Pursuant to the FRB's reserve requirements, the subsidiary banks were required to maintain certain cash reserve balances with the Federal Reserve System of approximately $502,000 and $395,000 at December 31, 2002 and 2001, respectively.

The Company and its subsidiary banks are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and each subsidiary bank must meet specific capital guidelines that involve quantitative measures of the Company's assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weighting and other factors.

Qualitative measures established by regulation to ensure capital adequacy require the Company and each subsidiary bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital to average assets (as defined). Management believes that the Company and each subsidiary bank, as of December 31, 2002, meet all capital adequacy requirements to which they are subject.

As of December 31, 2002, each subsidiary bank met the capital ratios of Well Capitalized. However since two of the three subsidiary banks are under a Formal Agreement with their regulator, the capital guidelines are not applicable to them. In general, to be categorized as Adequately Capitalized or Well Capitalized, the banks must maintain the following capital ratios:



|                                                                                     | AdequatelyCapitalized | WellCapitalized
|------------------------------------------------------------------------------------ | --------------------- | ---------------
|Total risk-based capital ratio
Tier 1 risk-based capital ratio
Tier 1 leverage ratio | 8.0%
4.0%
4.0%        | 10.0%
6.0%
5.0%

The Company's and Community Bank's (the largest subsidiary bank) actual capital amounts and ratios are presented in the following table:



|                                                                                                        |                |                       | Minimum Regulatory Capital Guidelines for Banks
|------------------------------------------------------------------------------------------------------- | -------------- | --------------------- | -----------------------------------------------
|(Dollars in thousands)                                                                                  | Actual         | AdequatelyCapitalized | WellCapitalized                                
|                                                                                                        | Amount         | Ratio                 | Amount                                         
|As of December 31, 2002:Total capital-risk-based
(to risk-weighted assets):
Community Bank
Consolidated | $15,623
20,945 | 11.4%
10.6%           | $10,994
15,766                                 
|Tier 1 capital-risk-based
(to risk-weighted assets):
Community Bank
Consolidated                        | $13,905
18,482 | 10.1%
9.4%            | $5,497
7,883                                   
|Tier 1 capital-leverage
(to average assets):
Community Bank
Consolidated                                | $13,905
18,482 | 8.3%
7.3%             | $ 6,680
10,160                                 
|                                                                                                        |                |                       | Minimum Regulatory Capital Guidelines for Banks
|(Dollars in thousands)                                                                                  | Actual         | AdequatelyCapitalized | WellCapitalized                                
|                                                                                                        | Amount         | Ratio                 | Amount                                         
|As of December 31, 2001:Total capital-risk-based
(to risk-weighted assets):
Community Bank
Consolidated | $14,256
20,553 | 10.3%
10.0%           | $11,109
16,403                                 
|Tier 1 capital-risk-based
(to risk-weighted assets):
Community Bank
Consolidated                        | $12,520
17,990 | 9.0%
8.8%             | $5,554
8,202                                   
|Tier 1 capital-leverage
(to average assets):
Community Bank
Consolidated                                | $12,520
17,990 | 7.3%
7.2%             | $6,821
10,053                                  

On April 11, 2002, Cumberland Bank entered into an agreement with the OCC, pursuant to which Cumberland Bank agreed to take certain measures to ensure its safe and sound operations, including:

- appointing of a compliance committee responsible for monitoring and coordinating the agreement;
- reviewing Board's committee structure;
- achieving certain capital levels;
- implementing a written risk management program;
- implementing a written program to improve loan portfolio management and administration;
- employing a qualified consultant to perform an ongoing asset quality review;
- obtaining current and satisfactory credit information on all loans lacking such information;
- establishing a program for the maintenance of an adequate allowance for loan and lease losses;
- improving the liquidity position to a level that is sufficient to sustain current operations and to withstand any extraordinary demand against the funding base;
- adhering to legal lending limits;
- correcting each violation of law or regulation;
- adopting a written three-year strategic plan;
- ensuring that financial books and records are restored to a complete and accurate condition;
- adhering to an independent audit program; and
- improving management of information systems activities.

On August 28, 2002, Tarpon Bank entered into an agreement with the OCC, pursuant to which Tarpon Bank agreed to take certain measures to ensure its safe and sound operations, including:

- submitting monthly progress reports to the OCC;
- appointing a new President;
- employing an independent outside management consultant;
- achieving certain capital levels;
- implementing a written program to improve management and administration of the loan portfolio;
- taking action to strengthen criticized assets;
- establishing a program for the maintenance of an adequate allowance for loan and lease losses;
- adopting a written three-year strategic plan;
- adhering to an independent audit program; and
- improving management of information system activities.

Note 20 - Dividends

The primary source of funds available to the Company to pay shareholder dividends and other expenses is from its subsidiary banks. Bank regulatory authorities impose restrictions on the amounts of dividends that may be declared by banks. Further restrictions could result from a review by regulatory authorities of the subsidiary banks' capital adequacy. During the calendar years 2002 and 2001, dividends paid by the Company to its shareholders amounted to $192,901 and $182,117, respectively. On a per share basis, the above dividends amounted to $.10 for each of calendar years 2002 and 2001.

Note 21 - Parent Company Financial Information

This information should be read in conjunction with the other notes to the consolidated financial statements.

Parent Company Balance Sheets

|                                                                         | December 31,            
|------------------------------------------------------------------------ | ------------------------
|                                                                         | 2002                    
|Assets:                                                                  |                         
|Cash                                                                     | $                       
|Accounts receivable                                                      |                         
|Investment in subsidiaries                                               |                         
|Investment in goodwill                                                   |                         
|Other Assets                                                             |                         
|Total Assets                                                             | $                       
|Liabilities and Shareholders' Equity:                                    |                         
|Accounts payable                                                         | $                       
|Note payable                                                             |                         
|Total Liabilities                                                        | $                       
|Common stock                                                             | $                       
|Retained earnings                                                        |                         
|Treasury stock                                                           |                         
|Accumulated comprehensive income                                         |                         
|Total Shareholders' equity                                               | $                       
|Total Liabilities and Shareholders' equity                               | $                       
|Parent Company Statements of Income                                     
|                                                                         | Years Ended December 31,
|Revenues:                                                                | 2002                    
|Interest income                                                          | $                       
|Management fees                                                          |                         
|Dividends from Community Bank                                            |                         
|Total revenues                                                           | $                       
|Expenses:                                                                |                         
|Salaries and benefits                                                    | $                       
|Interest expense                                                         |                         
|Professional fees                                                        |                         
|Amortization of goodwill                                                 |                         
|Other expenses                                                           |                         
|Total expenses                                                           | $                       
|(Loss) before taxes and equity in undistributed earnings of subsidiaries | $                       
|Tax (benefit                                                             |                         
|Income before equity in undistributed earnings of subsidiaries           | $                       
|Equity in undistributed loss of subsidiaries                             |                         
|Net income                                                               | $                       



|Parent Company Statements of Cash Flows                                          
|---------------------------------------------------------------------------------
|                                                                                 
|                                                                                 
|Cash flows from operating activities:                                            
|Net income                                                                       
|Adjustments to reconcile net income to net cash provided by operating activities:
|Equity in undistributed earnings of Bank                                         
|Amortization of goodwill                                                         
|(Increase) in receivables and other assets                                       
|(Decrease) in payables                                                           
|Net cash provided by operating activities                                        
|Cash flows from investing activities:                                            
|Investment in subsidiaries                                                       
|Decrease in investments                                                          
|Purchase of goodwill                                                             
|Net cash used by financing activities                                            
|Cash flows from financing activities:                                            
|Increase in borrowings                                                           
|Exercise of warrants, options                                                    
|Sale of stock                                                                    
|Payment of cash dividends                                                        
|Purchase of treasury stock                                                       
|Net cash provided by financing activities                                        
|Net (decrease) in cash and cash equivalents                                      
|Cash and cash equivalents, beginning of year                                     
|Cash and cash equivalents, end of year                                           

Note 22 - Subsequent Events

As of the date of this report, the Company did not have sufficient liquid assets to pay its annual debt obligation of $504,200, which obligation is due on April 1, 2003. The Company is evaluating all available alternatives to bring about resolution of this matter.

|Item 8. | Changes in and Disagreements With Accountants and Financial Disclosure.
|------- | -----------------------------------------------------------------------

The Registrant did not change accountants in 2002 and continues to use the independent accounting firm of Francis & Company, CPAs.

PART III

|Item 9. | Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act.
|------- | ----------------------------------------------------------------------------------------------------------------
|A.      | Directors.                                                                                                      

The following table provides biographical information for each director and executive officer of the Registrant. The Board is divided into three equal classes, with the term of each class staggered so that in any given year no more than one-third of the total Board membership shall stand for re-election. Board members are elected for a three-year term and serve until their successors are elected and qualified. Except as otherwise indicated, each individual has been or was engaged in his/her present or last principal occupation, in the same or a similar position, for more than five years.

|Name                               | Age                           | Position with Company and Bank and Principal Occupation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|---------------------------------- | ----------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Class I (Terms expiring in 2003)  
|T. Brinson Brock, Sr.              | 46                            | Mr. Brock has served as a director of the Company since August 1989, President and Chief Executive Officer of CNB since March 24, 1998, a director and Secretary of CNB since August 1990 and a director of Tarpon since February 2000 and a director of Cumberland from October 1999 until June 2002. In addition, he served as the President and Chief Executive Officer of the Company from June 1999 until June 2002, as Executive Vice President and Acting Chief Executive Officer from March 24, 1998 to June 7, 1999, and as Secretary of the Company from November 1989 to May 1998. Mr. Brock raises beef cattle out of which he places many FFA and 4H show calves for club members across the state. He also raises quarter and registered miniature horses, which his children show and sell. He serves as Vice President of the Turner County Cattlemen's Association. He is an active member of Georgia Banker's Association Agricultural Committee and is an instructor in various AIB and bank training programs. Mr. Brock is a member of both the Turner and Crisp County Chambers of Commerce. He is a deacon of Ashburn First Baptist Church.
|Willis R. Collins                  | 57                            | Mr. Collins has served as director of the Company since August 1989 and served as Chairman of the Board from August 2000 to July 2002 and from August 1990 to July 1992. He has served as a director of CNB since August 1990. Mr. Collins served as a Commissioner of Turner County, Georgia from 1986 to 1993. He organized Cotton Warehouse, Inc. in 1988 and is a partner and manager of Arabi Gin Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Shirley Crawford                   | 66                            | Ms. Crawford has served as a director of the Company, and of CNB, since July 2002. She is a community volunteer in Turner County.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Donald M. Crews                    | 55                            | Mr. Crews has served as a director of the Company since May 1999 and of Cumberland since October 1999. Mr. Crews has been the owner and operator of Furniture Factory Outlet, St. Marys, Georgia, since 1985. Mr. Crews also owns and manages real estate. Mr. Crews is a past director of the Camden/Kingsbay Chamber of Commerce and the Camden/Kingsbay Navy League and has served for six years on the Better Business Committee for Camden County.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Benny Warren Denham                | 72                            | Mr. Denham has served as a director of the Company since August 1989, of CNB since August 1990, and of Cumberland since February 2000. Mr. Denham currently serves as the Chairman of the Board of CNB and served as Chairman of the Board of the Company from August 1992 to July 1994. Mr. Denham is a co-owner of Denham Farms and has operated this farming business since 1951. Mr. Denham has been a director of Oglethorpe Power Company since 1988, and serves as its Chairman. Mr. Denham serves on the Georgia Electric Membership Corporation Executive Committee and is a past President. He is also director of Irwin Electric Membership Corporation and served as Chairman for several years. Mr. Denham served as a Commissioner of Turner County, Georgia from 1980 to 1990.                                                                                                                                                                                                                                                                                                                                                                     
|Class II (Terms expiring in 2004) 
|Lloyd Greer Ewing                  | 58                            | Mr. Ewing has served as a director of the Company since August 1989, and of CNB since August 1990. He served as Chairman of the Board for the Company from August 1996 to July 1998. Mr. Ewing joined Ewing Buick, Pontiac, GMC Trucks, Inc. in 1973 and has held various positions in that company. He is now its President and General Manager. Mr. Ewing is a former member of the Board of Directors at First Federal Savings Bank of Turner County.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Grady Elmer Moore                  | 68                            | Mr. Moore has served as a director of the Company since August 1989, and of CNB since August 1990. Mr. Moore runs a row crop operation, G.M. Farms, Inc., which he has pursued for the past thirty-six years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Sara Ruth Raines                   | 57                            | Mrs. Raines currently serves as the Chairman of the Board of the Company. She has served as a director of the Company since August 1989 and as a director of CNB since August 1990. She has also served as a director of Cumberland since February 2000. Mrs. Raines served simultaneously as Chairman of the Board of the Company and Chairman of the Board of CNB from August 1998 to August 2000. She is the President of Raines Investment Group, Inc., which is a franchisee of Aaron's Sales and Leasing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Joe Sheppard                       | 69                            | Mr. Sheppard has served as a director of the Company since May 1999 and of Cumberland since October 1999. He has served as Chairman of the Board of Resource Systems, Inc., an Atlanta-based company engaged in the telecommunications business, for more than six years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Class III (Terms expiring in 2005)
|Bobby Y. Franklin                  | 57                            | Mr. Franklin has served as a director of the Company since May 1999 and of Cumberland since October 1999. Mr. Franklin has been the owner and operator of B&D Tire Company in Kingsland, Georgia, since 1979 and the owner of Franklin Properties in Hilliard, Florida, since 1979. Mr. Franklin serves as director of the Georgia Tire and Retreaders Dealers Association.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Benjamin E. Walker                 | 72                            | Mr. Walker has served as a director of the Company since August 1989, and of CNB and Tarpon since August 1990 and March 2000, respectively. He served as Chairman of the Board of the Company from August 1994 to July 1996. Mr. Walker is a part-owner of M & W Sportswear, Inc., a local garment contracting company. Mr. Walker is also a co-owner of SWS Garment, Inc., a uniform manufacturing company in Fitzgerald, Georgia.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Jimmie Ann Ward                    | 65                            | Mrs. Ward has served as a director of the Company since August 1989, and of CNB since August 1990. Mrs. Ward is Vice President of Ward Land Company and is a community volunteer in Turner County.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Freddie J. Weston, Jr.             | 65                            | Mr. Weston has served as a director of the Company since August 1989, and as director and Chairman of CNB since August 1990 and August 2000, respectively. Mr. Weston served in the U.S. Army for more than twenty-five years, retiring in October 1981. Since 1983, he has been the coordinator of Vocational Academic Education at Turner County High School where he is Assistant Principal and teaches business and financial management.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|B.                                 | Executive Officers.          
|Theron G. Reed                     | 60                            | Theron G. Reed has served as the Company's President and Chief Executive Officer of the Company since June 2002. He is a co-founding director of the Company and served as its first President and Chief Executive Officer from November 1989 until March 1998. Mr. Reed served as president of Rockwood Industries from March 1998 to June 2002. He was employed by the Ashburn Bank from 1965 until April 1989, serving as President and CEO from March 1980 until his resignation in April 1989.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|C.                                 | Compliance with Section 16(a)

The Company believes that under the SEC rules for reporting securities transactions by executive officers, directors and beneficial owners of more than 10% of the Common Stock, all required reports for 2002 have been timely filed.

|Item 10. | Executive Compensation.  
|-------- | -------------------------
|A.       | Named Executive Officers.

The following table sets forth the compensation paid to the named executive officers of the Company for each of the Company's last three completed fiscal years:

|SUMMARY COMPENSATION TABLE                                                                                                                                                  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Annual Compensation                                                                                                                                                         
|Name and Principal Position (a)                                                                                                                                             
|Theron G. Reed
President and Chief Executive Officer of the Company                                                                                                         
|T. Brinson Brock, Sr*.
Former President and Chief Executive Officer of the Company                                                                                          
|*Mr. Brock served as President and Chief Executive Officer of the Company from June 1999 until June 11, 2002, at which time he was replaced in these capacities by Mr. Reed.
|Long Term Compensation                                                                                                                                                      
|Name and Principal Position (a)                                                                                                                                             
|Theron G. Reed
President and Chief Executive Officer of the Company                                                                                                         
|T. Brinson Brock, Sr.
Former President and Chief Executive Officer of the Company                                                                                           

(1)

(2)

(3)



OPTION/SAR GRANTS IN LAST FISCAL YEAR

In 2002, the Company did not make any grants of stock options to executive officers.

|AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION/SAR VALUES
|--------------------------------------------------------------------------------
|Name
(a)                                                                        
|Theron G. Reed
T. Brinson Brock, Sr.                                            

(1)

|B. | Directors.
|-- | ----------

Each director of the Company received $500 for each regularly scheduled meeting of the Board of Directors that he or she attended. Directors were not paid for special meetings of the Board of Directors.

|Item 11. | Security Ownership of Certain Beneficial Owners and Management.
|-------- | ---------------------------------------------------------------

On March 28, 2003, the Company had 1,271 shareholders of record.

|SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS                                                                                                                                                                                                                                                                                                                               
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|As of March 28, 2003, there are no persons or entities known to the Company to be a beneficial owner of more than 5% of the Common Stock. Please see the first footnote in the section below entitled "Security Ownership of Management" for a definition of "beneficial ownership" set forth in rules under Section 13(d) of the Securities Exchange Act of 1934, as amended.

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth share ownership information as of March 28, 2003 of the Registrant's Common Stock with respect to (i) each director and named executive officer of the Registrant who beneficially owns Common Stock of the Registrant; and (ii) all directors and named executive officers of the Registrant as a group*:

|Name and Address of Beneficial Owner                                        | Numberof shares | Percentof Class(1)
|--------------------------------------------------------------------------- | --------------- | ------------------
|T. Brinson Brock, Sr.
1252 Brock Road
Arabi, Georgia 31712                  | 84,664(2)       | 4.21%             
|Willis R. Collins
9655 Georgia Highway 112 East
Rebecca, Georgia 31783      | 92,165(3)       | 4.58%             
|Shirley Crawford
56 South Academy Street
Rebecca, Georgia 31783             | 95,222(4)       | 4.74%             
|Donald W. Crews
2001 Osborn Road
St. Marys, Georgia 31558                   | 31,510(5)       | 1.56%             
|Benny Warren Denham
424 East Inaha Road
Sycamore, Georgia 31790             | 32,830(6)       | 1.63%             
|Lloyd Greer Ewing
545 East Monroe
Ashburn, Georgia 31714                    | 39,211(7)       | 1.95%             
|Bobby Y. Franklin
Route 3, Box 6560
Hilliard, Florida 32046                 | 41,000(8)       | 2.02%             
|Grady Elmer Moore
5580 Highway 33 North
Arabi, Georgia 31712                | 81,050(9)       | 4.03%             
|Sara Ruth Raines
P.O. Box 606
Ashburn, Georgia 31714                        | 70,509(10)      | 3.51%             
|Theron G. Reed
2945 Georgia Highway 90W
Rebecca, Georgia 31783              | 21,201          | 1.05%             
|Joe S. Sheppard
119 River Bend Drive
St. Marys, Georgia 31558               | 22,000(11)      | 1.09%             
|Benjamin E. Walker
P.O. Box 185
Ashburn, Georgia 31714                      | 79,861(12)      | 3.97%             
|Jimmie Ann Ward
1330 Warwick Highway
Ashburn, Georgia 31714                 | 75,000(13)      | 3.73%             
|Freddie J. Weston, Jr.
828 West Madison Avenue
Ashburn, Georgia 31714       | 15,000          | 0.75%             
|All directors,
nominees and named
executive officers as a group(13 persons) | 781,223 shares  | 38.05%            

*	Information relating to beneficial ownership of common stock is based upon "beneficial ownership" concepts set forth in rules of the SEC under Section 13(d) of the Securities Exchange Act of 1934, as amended. Under such rules, a person is deemed to be a "beneficial owner" of a security if that person has or shares "voting power," which includes the power to vote or direct the voting of such security, or "investment power," which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any security of which that person has the right to acquire beneficial ownership within 60 days. Under the rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he has no beneficial interest. For instance, beneficial ownership includes spouses, minor children and other relatives residing in the same household, and trusts, partnerships, corporations or deferred compensation plans which are affiliated with the principal.

1. The percentages are based on 2,011,495 shares of Common Stock outstanding, plus shares of Common Stock which may be acquired by the beneficial owner, or group of beneficial owners, within 60 days of March 28, 2003, by exercise of options and/or warrants. The percentage total differs from the sums of the individual percentages due to the differing denominators with respect to each calculation.
2. Includes 1,190 shares held as custodian for Brent Brock, 1,006 shares held as custodian for Kristen Brock, 370 shares held as custodian for Hunter Chess Brock, and 1,224 shares owned by Mr. Brock's wife, as to all of which Mr. Brock disclaims beneficial ownership.
3. Includes 45,132 shares owned by Mr. Collins's wife as to which he disclaims beneficial ownership.
4. Includes 8,115 shares held as custodian for her son Gene Scott Crawford and 8,115 shares held as custodian for her son Phillip Andrew Crawford, as to all of which she disclaims beneficial ownership.
5. Includes the right to acquire 15,000 shares pursuant to currently exercisable warrants.
6. Includes 4,788 shares owned by Mr. Denham's wife as to which he disclaims beneficial ownership.
7. Includes 9,000 shares owned by his children (3,000 each for Mary Margaret Ewing, Lloyd S. Ewing and Jennifer L. Ewing) as to which Mr. Ewing disclaims beneficial ownership.
8. Also includes the right to acquire 16,000 shares pursuant to currently exercisable warrants.
9. Includes 5,000 shares owned by Mr. Moore's wife as to which he disclaims beneficial ownership.
10. Includes 1,500 shares owned by Ruth's of Ashburn, Inc., 900 shares owned by Georgia Produce EXC, Inc. and 35,019 shares owned by Mrs. Raines's husband and his IRA, as to all of which Ms. Raines disclaims beneficial ownership.
11. Also includes the right to acquire 11,000 shares pursuant to currently exercisable warrants.
12. Includes 35,061 owned by the Walker Family Partnership. Also includes 12,300 shares owned by Mr. Walker's wife as to which he disclaims beneficial ownership.
13. Includes 15,000 shares held in the name of her son, Michael E. Ward.

|Item 12. | Certain Relationships and Related Transactions.
|-------- | -----------------------------------------------

During 2001 and 2002, CNB loaned funds to certain of the Company's executive officers and directors in the ordinary course of business, on substantially the same terms as those prevailing at the time for comparable transactions with other customers, and which did not involve more than the normal risk of collectibility or present other unfavorable features.

|Item 13.           | Exhibits List and Reports on Form 8-K.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                   | A. Exhibits.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Exhibit Number     | Sequential Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|3(i)               | Amended and Restated Articles of Incorporation of Registrant, incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-4, File 333-92407, which became effective on January 27, 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|3(i)(a)            | Amendment to Amended and Restated Articles of Incorporation of Registrant, which became effective on April 9, 2003*.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|3(ii)              | Bylaws of Registrant, incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-4, File 333-92407, which became effective on January 27, 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|4                  | Non-Voting Series A Preferred Stock Purchase Agreement between Registrant and 13 of its directors, effective April 9, 2003*.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|21                 | Subsidiaries of Registrant*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|99.1               | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|99.2               | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|* Attached hereto.
|                   | B. Reports on Form 8-K.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                   | On September 19, 2002, Registrant filed a report on Form 8-K describing the agreement entered into between Registrant and Trident Securities, a division of McDonald Investments Inc. ("Trident"), wherein Trident agreed to provide financial advisory services for Registrant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Item 14.           | Controls and Procedures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                   | Within 90 days of the filing of this Report, the Company carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the Company's disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective in timely alerting them to material information required to be included in periodic filings with the Securities and Exchange Commission.
There were no significant changes in our internal controls or in other factors that could significantly affect these internal controls subsequent to the date of our most recent evaluation.



SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this amended report to be signed on its behalf by the undersigned, thereunto duly authorized.

| | COMMUNITY NATIONAL BANCORPORATION(Registrant)
BY: /S/ Theron G. Reed
Theron G. Reed, President and Chief Executive Officer
(Principal Executive Officer)
| | --------------------------------------------------------------------------------------------------------------------------------------------------------
| | /S/ Terry L. Alston
Terry L. Alston
(Principal Financial Officer and 
Principal Accounting Officer)                                                     

Date: April 11, 2003

In accordance with the Exchange Act, this amended report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

|Signature                                        | Title                              | Date          
|------------------------------------------------ | ---------------------------------- | --------------
|/S/ Theron G. Reed
Theron G. Reed.               | President, Chief Executive Officer | April 11, 2003
|/S/ Sara Ruth RainesSara Ruth Raines             | Chairman of the Board and Director | April 11, 2003
|/S/ T. Brinson Brock, Sr.
T. Brinson Brock, Sr.  | Director                           | April 10, 2003
|/S/ Willis R. Collins
Willis R. Collins          | Director                           | April 11, 2003
|/S/ Shirley Crawford
Shirley Crawford            | Director                           | April 11, 2003
|/S/ Donald M. CrewsDonald M. Crews               | Director                           | April 11, 2003
|/S/ Benny W. Denham
Benny Warren Denham          | Director                           | April 10, 2003
|/S/ Llayd Greer Ewing
Lloyd Greer Ewing          | Director                           | April 11, 2003
|/S/ Bobby Y. FranklinBobby Y. Franklin           | Director                           | April 11, 2003
|/S/ Grady Elmer MooreGrady Elmer Moore           | Director                           | April 11, 2003
|/S/ Joe E. SheppardJoe S. Sheppard               | Director                           | April 11, 2003
|/S/ Benjamin E. WalkerBenjamin E. Walker         | Director                           | April 11, 2003
|/S/ Jimmie Ann WardJimmie Ann Ward               | Director                           | April 11, 2003
|/S/ Freddie J. Weston, Jr.Freddie J. Weston, Jr. | Director                           | April 11, 2003



CERTIFICATIONS

I, Theron G. Reed, certify that:

l.	I have reviewed this annual report on Form 10-KSB of Community National Bancorporation;

2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.	The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a)	Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b)	Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

c)	Presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.	The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.	The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: April 11, 2003.

/S/ Theron G. ReedTheron G. Reed
President and Chief Executive Officer

CERTIFICATIONS

I, Terry L. Alston, certify that:

l.	I have reviewed this annual report on Form 10-KSB of Community National Bancorporation;

2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.	The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a)	Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b)	Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

c)	Presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.	The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.	The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: April 11, 2003.

/S/ Terry L. AlstonTerry L. Alston
Chief Financial Officer